[governance] REPORT: 25 Years of Deregulation with No Serious Oversight Harmed the US Economy, World Standing and Customers.

[Fouad Bajwa]

The following data should be of great interest to members especially
from the US. (originally forwarded from the DDN List):

> Teletruth Network

> New Networks Institute Releases Report: (63 pages)
> http://www.teletruth.org/docs/belldata.doc
>
> 25 Year Analysis of Key Financial Indictors for the Bell Companies – AT&T,
> Verizon and Qwest
>
> Bibliography and Free Ebook:
> http://www.newnetworks.com/html/Bibliography.htm
>
> Covers: Market consolidation, revenues, profits, executive compensation,
> foreign investment and losses, wireline and wireless competition, Internet
> competition, broadband deployment, construction expenditures, depreciation,
> employees, cost of local, long distance, wireless service, 'access line'
> manipulation, ‘very small business’ wireless spectrum issues, and
> ‘vaporware’ and corporate influence over policy.
>
> The name of this report should be: “How 25 years of deregulation and massive
> consolidation with almost no oversight harmed the US economy, America’s
> world standing, as well as America’s telecom, broadband, Internet and cable
> customers.”
>
> This report details specific key indicators outlining why America is 15th in
> the world in broadband, why prices continue to rise, why there is little or
> no competition for most services and why, on our current path, America will
> not fix the issues that have harmed competition and choice. In short, we had
> better learn from the last 25 years as the problems created are harming the
> country’s economic growth, our worldwide competitive edge, as well as phone
> and broadband customers.
>
> >From excessive executive pay and corporate profits, to a failure to invest
> in critical infrastructure, the current incumbents, AT&T, Verizon and Qwest,
> with the help of laizze faire regulators, are clearly more concerned about
> their shareholder wealth then as the caretakers of America's essential
> Public Switched Telephone and Broadband Infrastructure.
>
> In short, the financial sector was not the only industry where deregulation
> and a failure of oversight harmed the public good in exchange for corporate
> greed.
>
> Verizon and AT&T and Qwest: Some Data Bits. (As of December 2008)
>
> Business
> • Excessive Mergers have Eliminated Competition -- In 1984 through 1996,
> there were 12 potential competitors. Legacy-AT&T and MCI were the 2 largest
> competitors. By 2009 there are three companies that do not compete for
> wireline service, long distance service and broadband.
> • Revenues -- Grew 220% since 1984 to $235 billion, split mostly by AT&T and
> Verizon.
> • Executive Compensation -- From 2006 through 2008, Verizon’s top 5
> executives received $194 million dollars. In 2006, AT&T was bought by SBC
> and the top 6 executives made $168 million.
> • Profits and CASH -- In 2008, Verizon and AT&T had $74 billion in “cash”,
> known as "EBITDA", Earnings Before Interest, Taxes, Depreciation &
> Amortization.
> • Employees: Job cuts are over 70% since 1984, when compared to revenues for
> wireline phone services.
> • Tax Payments in 2008 -- Verizon only paid 3% of the total revenue on
> income taxes, while AT&T only 5%.
>
> Broadband and Spending
> • Broadband Funding -- Collected over $300 billion for broadband yet failed
> to upgrade the Public Switched Telephone Networks. The money is still being
> collected today in current phone rates as excess profits.
> • Broadband -- America lost almost $6.5 trillion dollars in GDP growth for
> the failure to upgrade America.
> • Construction -- Underspent $58-$161 billion dollars on capital
> expenditures.
> • Depreciation -- Took from $100 billion to $371 billion in excess tax write
> offs (deprecation).
> • Overseas -- Collectively lost over $40 billion dollars in overseas and
> other investments.
>
> Competition
> • Harmed Competition -- Today, only 6% of the incumbent lines are
> competitive, down 61% since 2004 as a direct consequence of bad FCC
> policies.
> • Harmed ISPs and Choice -- Over 7000 independent Internet Providers were
> harmed, many were put out of business through bad deregulation or predatory
> customer service.
> • 6+ Revenue Streams with No Serious Competition -- The telcos split
> broadband and Internet Provisioning (ISP) with the cablecos - a duopoly. The
> cablecos are cable monopolies. Verizon and AT&T combined had 3 million
> TV-upgraded homes. The phone companies are wireline monopolies, as well as
> control the ancillary incomes from directory assistance, long distance and
> other related businesses. Cable only has 15% of local service. Wireless only
> households are 15% and AT&T and Verizon control over 80% of wireless service
> and have the majority in their territories.
> • Wireless and all of the other Bell businesses have been subsidized by
> raising local rates with little oversight.
> • Merger Failures --- Merger after merger the Bell companies lied to
> regulators, claiming that they would be competing out of their own
> territories if the mergers were approved. SBC was to be in 30 cities by
> 2002, Verizon 24 in the same time period. They never competed against each
> other in any meaningful way.
> • Mergers Harmed Broadband -- AT&T's latest merger required the company to
> have 100% broadband capable of at least 200K in all states by 2007 and offer
> $10 DSL to new users. Didn't happen. In 1999, AT&T had claimed they would
> spend $6 billion on 'Project Pronto'. Stopped spending post merger. Almost
> every AT&T state had plans for broadband that were cancelled after each
> merger, including SNET, Pacific Bell and Ameritech.
>
> Phone Services
> • Competition failure harmed customers with less choice and higher prices.
> • Local Service -- By 2008, Verizon, New York’s local phone service
> increased 524% since 1980.
> • Long Distance -- In 2009, AT&T’s basic long distance rate one minute call
> cost $.42; higher than 1980.
> • Long Distance -- A recent California phone bill study found that because
> of plan fees and other charges, the average subscriber paid $.55 a minute.
> • Wireless -- A recent California phone bill study found that because of
> plan fees and other charges, the average subscriber paid $3.02 a minute.
> High volume customers with 2 or more lines averaged $.29 a minute.
> • Packages -- High volume customers save using packages, representing
> approximately 1/3 of users. The majority of customers are usually on
> expensive plans and are paying more.
>
> Scandals
> • Wireless -- Verizon & AT&T were able to bid with a ‘designated entity’ on
> spectrum as “very small businesses”, saving $8 billion.
> • Missing Equipment “Vaporware” -- In 1999, the FCC released an audit of the
> Bell companies and found $18.6 billion in missing network equipment had been
> added to rates. This was only ¼ of the required audit, thus $80 billion
> dollars of missing equipment could have been added to phone rates and as tax
> savings.
> • FCC Data is Atrocious -- From the FCC data on broadband, phone bills or
> data used in regulatory proceedings pertaining to small business
> competition, the FCC’s bad data has led to bad US policy. For example, the
> FCC’s small business impact studies discuss the current market harms to
> competition using data from 1992, 1993, 1994, 1997 --- 8 to 17 years old.
> Corporate Influence
> • Corporate influence -- Through lobbying, campaign contributions, astroturf
> groups, corporate-funded think tanks, co-opted consumer groups, and even the
> corporations’ own staff, deception and undue influence are now the working
> agenda in the US on both the state and federal level.
>
> Note: This report was prepared as part of presentation by New Networks
> Institute at:  “Has Divestiture Worked? A 25th Anniversary Assessment of the
> Breakup of AT&T”,
>
> Sponsored by Open Infrastructure Alliance and the Internet Society, New York
> Chapter. To see http://www.isoc-ny.org/?p=618
>
> To view this release online.
> http://www.newnetworks.com/attverizontwentyfifth.htm
>
> Bruce Kushnick, Executive Director, New Networks Institute
> bruce at newnetworks.com
> http://www.newnetworks.com
>
> Teletruth
> http://www.teletruth.org

-- 

Regards.
--------------------------
Fouad Bajwa
@skBajwa
Answering all your technology questions
http://www.askbajwa.com
http://twitter.com/fouadbajwa
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