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Does Verizon owe you money?

By Scott Bradner

Would it surprise you to hear that the telecos have been ripping you off for years by promising all sorts of advanced services as long as regulators do them a favor or two then failing to deliver on the promises? This is the premise of "$200 Billion Broadband Scandal," a new book by Bruce Kushnick. I will say that the idea did not surprise me.

The book (see http://www.newnetworks.com/scandals.htm) is not a dispassionate exportation of the topic. It is more of a polemic than a reasoned scholarly treatise. That is not to say that the over 400 page book is not very well researched or that it does not present a compelling picture of carrier perfidy and regulatory complicity. You can get a good summary of the arguments in a guest column Kushnick did for Puliver.com (http://pulverblog.pulver.com/archives/003680.html) with the provocative title "Net Neutrality is Hogwash." (It's hogwash because the current net neutrality debate does not go far enough.)

The basic premise of the book is that for many years the telephone companies have told regulators that they would roll out high-speed two-way data connectivity in exchange for the regulators increasing telcom tariffs. The promise was that the carrier would use the extra money to deploy open-access broadband data services. There are many examples cited in the book including New Jersey where New Jersey Bell promised to start deploying 45 Mbps data service to New Jersey residential and business customers in 1996 and finish by 2010. New Jersey Bell got their money, from the customers, but about 0% of New Jersey customers got the service. Whatever New Jersey Bell did with the extra money it did not involve service deployment.

According to Kushnick, the average cost of the carrier's games is about $2000 per customer to date mostly from excess profits and tax rebates. A total of over $200 B for the country. This is 'real money,' to use the phrase attributed to Senator Everett Dirksen. (It seems that Dirksen may not have coined the phrase after all - see http://www.dirksencenter.org/print_emd_billionhere.htm.)

The book does point out that many of the plans that the carriers put forward could not actually be built with the technology available at the time, or in some cases, even now. That did not stop the carriers from making the promises and getting the regulators to buy in. This technical reality has cased a number of the plans to be abandoned but I could not find an example of a carrier reducing their rates to what they would have been without the promise.

If you have been reading any of what the carriers are now saying in the network neutrality arguments in front of congress you will notice that the carriers are making threats instead of promises. Their threat is that will continue to not deploy what they have promised repeatedly to deploy. Note that the previous promises were not contingent on a non-neutral network.

So far it appears that Congress and the FCC are following precedent and swallowing the carriers tales of a future network utopia as long as the carriers are just permitted to raise prices and rid themselves of any pesky requirement to be fair to users of the utopian network. Want to take odds on the level of deployment of useful technology in 10 years?

disclaimer: Some people at Harvard study past utopias but I do not know of any who study utopias that are the figments of telco lobbyists so the above extend book review is my own.