What This Means For VOIP?

The following is cross-posted at Jeff Pulver’s blog,  Pulver.Com.

First, I’d like to thank Jeff and Jonathan for the opportunity to make this wake up call.

Will VOIP be killed off as a stand alone service? The trends are all
there to make it happen. From the fake astroturf consumer groups trying
to add Universal Service and taxes and surcharges, or the Bell
companies being able to bundle their services through massive
‘cross-subsidization’, i.e., customer funding of the Bell companies’
own DSL and long distance businesses, how will VOIP survive?

But it’s a lot worse than that. — "We own the pipes" Ed Whitacre of
SBC exclaims. BellSouth now claims that they can give themselves better
treatment or charge companies for the privilege, while Verizon is
calling for an end to Google’s ‘free lunch’.

Even Senator Ensign quoted herein, "We don’t have the financial incentives for networks being built."

This is all hogwash. America is 16th in broadband and falling. Our
current services are inferior to Korea and Japan who are delivering
bi-directional 100 Mbps services for $40 bucks. (FIOS is 30 mbps top
speed at $199.)

But worse — You were lied to. That’s right. You see, customers
funded fiber optic networks they never received, to the tune of $2000
per household — about $200 billion. By 2006, 86 million households
should have had a fiber optic based service capable of 45 Mbps in
bi-directions, that could handle over 500 channels of programming.

Let’s put some facts out there for all to see:

SBC, Verizon, BellSouth and Qwest, starting in the early 1990’s,
went state to state, promising to rewire the state if only regulations
were changed to give them massive financial incentives. (it varies by
state.) For example, by 2010, the entire state of New Jersey was to be
rewired. Don’t believe me? Here’s a link to a page from the original
Order. http://www.newnetworks.com/OpportunityNewJerseyFiber.htm

This is not DSL, an inferior service over the old copper wiring that
was considered inferior by the Bells in 1991. This is not FIOS or
Lightspeed, which are crippled networks. These are not bi-directional,
they can’t handle 45 Mbps and the IPTV video still doesn’t work — and
they are closed to competitors.

New Jersey wasn’t the only state scammed. Virtually every state in
America was to be fiberized. California was to have 5.5 million homes
by 2000. Here’s the information directly from Pac Bell about its wiring
plans. http://www.newnetworks.com/cabroadbandpacbell.htm

Bell Atlantic promised to have Philadelphia and Pittsburgh
Pennsylvania by 1997 with fiber to the curb, 12 million homes by the
end of the decade. Here’s a 1996 Bell Atlantic press release.

No wonder Philadelphia has been fighting to do Wifi— Verizon didn’t deliver.

In fact, the phone companies filed with the FCC to do video
dialtone, — cable competition using the phone lines. —- in 43
different cities/states by 1997. 9.7 million homes were to be wired.

http://www.newnetworks.com/videodialtonedeployment.htm

And most importantly — these networks, directly subsidized by
customers, were OPEN to competition. In fact, state laws all required
that the wiring be ubiquitous in rural, urban and suburban areas, rich
and poor equally. Customers gave money to a contractor to build a
highway, and they didn’t do it. More to the point, now the contractor
wants to decide who gets the highway and put up their own toll roads.

Here’s what happened to California — SBC pulled the plug, even though laws were changed based on the state commitments.

Ironically, the phone companies were also supposed to compete with
each other in the other regions. It was the basis for the SBC-Ameritech
and Bell Atlantic GTE mergers. Here’s the 30 cities SBC said it would
compete in by 2001. http://newnetworks.com/SBCfailedcities.html

What happened was collective Amnesia. Virtually no one seems to
remember that they have been paying SBC, Verizon BellSouth an Qwest for
over a decade for fiber optic networks they never received.

But the documentation is clear. We decided to put the data in a new
ebook: (shameless plug.) Check out the story in detail or read the
chapters on New Jersey of how SBC and Verizon killed off the fiber
optic networks in 26 states. We estimate that $200 billion in excessive
phone rates and tax perks were paid, with nothing to show for it. http://www.newnetworks.com/broadbandscandals.htm

There’s also a blogging community to talk about the issues: http://200billionscandal.typepad.com/

The dark secret? They couldn’t build the networks in 1992, much less
2006, not at the costs they had quoted. We in fact filed with the FTC
over this issue of fraud. http://www.newnetworks.com/FTCcomplaintSBCVerizon.htm

But let me address a few more issues.

Fake Consumer Groups controlling VOIP’s destiny.

First, fake consumer groups, biased research firms, paid off
politicians and lots of lobbying dollars are going into killing off
VOIP. We’ve filed complaints with the FCC

http://www.teletruth.org/USF.html

"Keep Universal Service Fair Coalition" is another Bell (SBC,
Verizon and BellSouth?) skunkworks campaign. The group is mainly
comprised of astroturf and co-opted groups funded by the Bell companies
and are being coordinated by Issue Dynamics

and Sam Simon, to
push the Bell monopoly agenda. In this case, this group is pushing an
anti-customer position on the Universal Service Fund — Raise this tax
and put it on new services, including VOIP. This group includes TRAC,
Alliance For Public Technology, American Association of People with
Disabilities, World Institute on Disability, League of United Latin
American Citizens, and the Gray Panther, among others.

See: http://www.newnetworks.com/skunkworks101.html

Using co-opted and astro-turf groups, over the last decade they have
taken away your voice at the FCC, in Congress, and in the media,
harming everything from broadband and the Internet, the wiring of
municipalities, the offering of innovative services, such as VOIP, to
increasing the charges on your phone bill and harming competition.
Instead of adding Universal Service to VOIP, the real question should
be why are we subsidizing very wealthy phone companies at the expense
of low income, seniors etc, and these consumer’s are backing policies
harmful to their own constituents.

Do you think it was a coincidence that there is also a group called
the "VOIP coalition", with almost same members, who supported putting
E911 on VOIP?, and funded directly by the Bell companies? http://www.apt.org/voip/

(And don’t get me started about how direct revenue to the phone
companies is hidden in the taxes and surcharges section of the phone
bills. Teletruth’s auditing services have help to create two class
action suits for overcharging in New Jersey, and we’ve only scratched
the surface of phone bill taxation.) http://www.teletruth.org/phonebillindependencereport.html

This astroturf issue is way more insidious than K Street lobbying
and needs to be exposed. Wifi-Networking News has also done some
investigations and found that these groups are working in concert to
help close down municipalities from offering services.
http://wifinetnews.com/archives/cat_sock_puppets.html>

Massive cross-subsidization and bundling is another serious problem.
— (i.e, illegally subsidizing the Bells’ DSL, wireless and Long
distance business through rates.) When Verizon gives its DSL price of
$14.95, it comes with a catch — the customer also has to buy their
long distance and local service package. This, and a lack of audits and
bad FCC decisions,have help to kill off AT&T and MCI. Now the
target is VOIP.

Our findings shows that instead of rewiring America, the companies
pulled a bait and switch. The companies not only could use the local
services advertising budget, such as phone bill inserts or major media
buys, and not have to pay what other competitors are forced to pay, but
also have the fiber deployed to help their own products, and not the
fiber to the home deployments. And through bundling, they can move
around the money, giving them unfair advantages from the word ‘go’.
This cross-subsidization is also the reason that their DSL retail price
is cheaper than the wholesale price.

What should happen next?

Net neutrality is a made up fiction and only has validity on the
planet Uranus. Instead Congress, the FCC, FTC, and the states should be
investigating how customers were defacto investors who funded "open"
networks they never received. Once everyone starts calling for an
investigation, this nonsense will be put to rest. Instead of charging
us more money, they should be investigated for the harms to America.

We estimate that $5 trillion dollars was lost in the economy because
the Bells failed to deliver. America would not be number 16 in the
world in broadband had we had 45 mbps services a decade ago as promised.

More to the point — Who’s kidding who? The phone companies should
not be trusted with our digital future. They screwed up more than once
(Remember ISDN — It Still Does Nothing?) Get the money and give it to
the municipalities would be one alternative. Regulate the pipe and
allow VOIP and ALL other services that the customer, not the phone
companies, want is another.

This is more than net neutrality. This is — Infrastructure that is
being held hostage needs to be freed on all levels. The Bells claim
they need incentives. They already got incentives. The Bells claim that
they will only build in only areas they want — Fuggedaboudit. It’s
time to take back the PSTN — that’s Public Switched Telephone
Networks. Customers have rights that have been taken, a "customer
takings", and the pendulum has swung too far to the right. It’s now our
turn.

###

Bruce Kushnick is the chairman and a founder of Teletruth, a
national customer alliance. Teletruth was a member of FCC Consumer
Advisory Committee 2003-2004.

Read: $200 Billion Broadband Scandal