Open Letter to California Legislators about SB.649

Read the original 9/10/17 Huffington Post Article or the one reproduced, below.

Dear CA Legislators, You are being played by ALEC, AT&T, Verizon, CTIA Et Al.

by Bruce Kushnick, 09/10/2017 04:01 pm ET

The California legislature is considering an industry-sponsored bill that claims it will bring a fabulous wireless tech future, 5G, that would replace the wires to the home and deliver cable, phone, broadband and internet services. But there’s a catch; the phone companies want the State to remove and preempt city and state laws, among other favors.

The history of broadband should have every member of the state legislature demanding an investigation of AT&T et al. and say to the still regulated Telecomm Companies:

  1. DO NOT GIVE these companies any more deregulation or any more tax perks
  2. STOP ALLOWING the billions collected in continuous customer overcharging
  3. STOP THE CROSS-SUBSIDIES from AT&T’s regulated Wireline entity to its unregulated Wireless entity.

Here Are 10 Reasons to Start Immediate Investigations

(This summarizes a series of recent articles by Bruce Kushnick and others.)

1) CA State AT&T Wireline Customers are Paying Billions to Fund AT&T’s Wireless Entity

5G, if and when it works, only has a range of a block or two, and it requires the cell sites to be connected to a fiber optic wire. How much of the wireless business has been cross-subsidized already and who’s paying for the 5G build out? AT&T claims that Wireline customers are funding the wireless build outs.

Bill Smith, President of AT&T’s Technology Operations, stated at the Wells Fargo Convergence & Connectivity Symposium on June 21, 2016, that the Wireline side of the business has been funding the Wireless build outs:

“I came more from the Wireline business and had always a little bit of frustration for me because for many years before I picked up operations in construction and everything for the Wireless side of the business. In the Wireline world, I was spending a lot of money that was directly supporting the Wireless operation, but it showed up [in the accounting] as Wireline spend. So we’re not that good at allocating those expenditures.”

And this is not new. Fran Shammo, Verizon’s former CFO, told investors in 2012 that Verizon’s Wireless entitity’s construction expenses have been charged to the Wireline entity.

“The fact of the matter is Wireline capital — and I won’t quote the number but it’s pretty substantial — is being spent on the Wireline side of the house to support the Wireless growth. So the IP backbone, the data transmission, fiber to the cell, that is all on the Wireline books but it’s all being built for the Wireless Company.”

As we uncovered in New York, Verizon has been cross-subsidizing most of the Wireless deployments — at the expense of not wiring and upgrading cities, and charging local phone customers. In fact, there is settlement underway to close up a long-standing investigation by the NY Public Service Commission, which relies, in part, on our analysis and is based on Verizon NY’s annual financial reports.

2) California’s State Bill 649 (‘SB.649’) Is a Con; It Is Based on “Model Legislation” Created by AT&T, Verizon, the CTIA, the Cellular Telephone and Internet Association and ALEC, the American Legislative Exchange Council.

The NW News Network writes about what’s going on in Washington state.

“According to the CTIA, 5G legislation is under consideration in some 30 states this year, although it won’t say where or provide details. The corporate-backed American Legislative Exchange Council, also known as ALEC, has also passed a resolution calling on states to “streamline” local permitting of small cell technology.” (Emphasis added)

And reported on identical legislation in Florida in July 2017:

“Municipalities say the bill is one-sided, would take away their ability to control where 5G equipment is installed and totally favors telecommunications giants such as AT&T, Verizon and Sprint. The companies want the right to install their equipment on utility poles in public rights-of-way.”

Senate Bill 596 sponsored by Sen. Travis Hutson, R-Palm Coast and House Bill 687, sponsored by Rep. Mike La Rosa, R-St. Cloud, would create the “Advanced Wireless Infrastructure Act” and prohibit the Florida Department of Transportation and local governmental entities from prohibiting, regulating or charging for collocation of small wireless facilities in public rights-of-way.”

Did you think that California was special? Like a whack-a-mole, the telcos and their associations have created a state-by-state attack on the public interest for their own interests.

Even worse, former Verizon attorney, now-FCC Chairman Ajit Pai, and former lawyer to AT&T, Verizon, and the CTIA, now-FCC Commissioner Brendan Carr are directly in on this with ALEC model legislation written for the FCC to preempt state and city laws and regulations.

3) California has been Deceived Over and Over about Broadband and Tech Deployments

In a recent Huffington Post article we laid out the details about California, where AT&T and the industry can say whatever they want, knowing they will not be held accountable. Take the plan to rewire California by Pacific Bell (now-AT&T California) who claimed it would be spending $16 billion to have 5 million households wired by 2000 with fiber optics — 17 years ago.

Moreover, this plan was directly related to raising rates and ‘deregulating’ the company in multiple ways. Pac Bell even took a $3.6 billion dollar tax deduction – and then, after Pac Bell’s merger with Southwestern Bell (SBC) in 1997, all fiber optic upgrades stopped, but the Customers’ rates were never lowered, there were no refunds establishing the fraud.

Read the excerpt: The History of Fiber Optic Broadband in California, 1993-2005

This same thing happened with the CA ‘statewide-franchise’ and U-Verse. AT&T claimed it was a fiber-to-the home service, and even got regulations changed at the FCC claiming this would be fiber. It ended up being a bait-and-switch — a copper-to-the-home service with fiber optic wires about a half mile away.

The deregulation gave the the telcos tax perks and rate increases with “price caps” (i.e., don’t examine the profits and free the monopoly to get whatever profits it can). These were just presents that never got the state properly upgraded, much less maintained.

In fact, AT&T had $154 billion dollars of revenue in the US in 2016 — after 25 years — AT&T has fiber-to-the-home in just 6% of their territories in 21 states, which includes 650,000 apartments and condos.

4) Local Prices Went Up 138% Since 2008; Ancillary Services Went Up 525%-1891%

In another article we laid out that the price of the AT&T utility local service skyrocketed when the price should have been in steep decline. Instead, Local Service went up 138%, but other add-ons, like non-listed numbers, went up 525% and Directory calling went up 1891% since 2004.

In fact, local phone customers are being “harvested”, where the company can simply raise rates without any financials to show that the state utility prices are ‘fair and reasonable’. If there is direct competition, then local prices can’t go up at will, and claiming that wireless is a substitute for a wired line, especially in the home, is ridiculous.

5) The State has Not Done an Audit of the Telcos and Claims It Can’t Do an Analysis of Cross-Subsidies.

As we previously wrote, the California Public Utility Commission stated:

“The Commission would need to audit those costs to ensure they have been accurately assigned to each service. Such an audit would be onerous as it would require the Commission to perform a cost of service analysis, which has not been performed in decades, since the Commission Adopted its New Regulatory Framework and established price caps to replace cost of service regulation.”

6) How Much Money has been Collected in the Name of Broadband in California?

This begs the question — why wasn’t the state properly upgraded in the first place? And how much money has been collected in the name of broadband, counting all of the state and federal funding, the deregulations, or what was supposed to be done as part of the mergers?

7) AT&T California Is the State Telecommunications Utility Which Is Being Dismantled by the Separate Subsidiaries – Illegally.

AT&T’s plan has always been to game the regulatory system and make claims that it wasn’t cost-effective to upgrade the networks. The plan is simple: shut off the copper wires where the company didn’t upgrade, and then put in Wireless — not 5G, but 4G + Hype — because that makes the most profits. However, part of the plan is to privatize the publicly funded networks, known as Business Data Services; these are basic copper (and fiber-optic) Wirelines that are used for the Wireless networks as well as the Wirelines to ATM machines and banks.

8)Telcos: We Will ‘Shut Off the Copper’ and Replace It with Inferior Wireless because It Makes Us More Money

This has been AT&T’s plan since 2012. AT&T’s original FCC IP Transition filing stated that at least 25% of the Wireline networks would not be feasible to upgrade – so they, too, would be ‘shut off’ and migrated to Wireless.

“In the 25 percent of AT&T’s wireline customer locations where it’s currently not economically feasible to build a competitive IP wireline network, the company said it will utilize its expanding 4G LTE wireless network — as it becomes available — to offer voice and high-speed IP Internet services.”

The plan is now to shut off all lines in any location that the companies wants to shut off. As we wrote, AT&T is manipulating the accounting of the lines already in service — as U-Verse is a copper-to-the-home service. It now looks like over 50% of the company’s territories can be thrown under the bus.

9) Investigate how an ALEC Bill Ended Up in California

Besides the fact that sponsors of the bill, State Senator Bill Quirk and Ben Hueso, both get not only campaign contributions from AT&T but also monies via AT&T’s Foundation for their territories, this OpEd by Quirk is based on buzz words like “smart cities”, economic gains and improve public safety.

“Senate Bill 649, by Sen. Ben Hueso, D-San Diego, and Bill Quirk, would establish a standardized, expedited process for statewide deployment of the equipment necessary to power 5G, the most advanced wireless technology ever to come to market.”

“SB 649 will help families and businesses gain access to a technology that will reshape modern life. The 5G technology will support smart cities, improve public safety, and provide environmental and economic gains. Put simply, SB 649 is vital to California’s future and deserves support.”

There will be no statewide deployment. The goal is to ‘shut off the existing copper networks’ and force-march customers onto to more expensive, price-per-gig services. Combined with the current FCC’s proceedings, it removes all remaining regulations and obligations to offer Wireline services in the state and allows it to be replaced with unregulated, more expensive Wireless service.

10) 5G Is the Broadband Hyped Carrot-of-the-Month. What Is the Actual Truth about Wireless Service?

The future is not pretty and it will not deliver what we paid for. This is a Verizon wireless customer’s speed test in San Jose, California, with an unlimited plan, who posted it on the Verizon community forum, Sep 7, 2017.

This litany of issues is part of an endless stream of complaints on the Verizon site.

It appears to be getting worse around the country: Here’s one example:


This question is Not Answered, Sep 7, 2017 6:06 AM

My business has been a Verizon customer since 1996. I have lived in the same area my entire life. I have lived in my current residence for 5 years. I have never had a service issue, besides the norm, until the past 6 months. I have no usable service or the ability to receive a call unless I am outside my house. I work from home and this is creating a major problem. I have to set up my office outside every day!! I have spoken with people in the every area in the surrounding 100 miles and as far as Tennessee, all the way to New York and down to West Virginia. They all have been having the same issue. They all pretty much get the same answer depending on how hard you push the subject.”

This is the unfortunate future: the states and the federal government conspire with the Telcos to trash the State Utilities, shut down the retail Wireline networks and push customers into inferior, less reliable and more expensive Wireless services controlled by a few companies who’s greatest skill is to take control of the regulators and legislators and fool the public and media.

Instead, there should be immediate investigations.

Those who vote for SB.649 should be challenged at the next election and questioned why they work primarily for AT&T et al. and not their own constituents’ interests.