THE BLOG
12/10/2013 10:47 am ET Updated Feb 08, 2014

The AT&T-Driven FCC-IP Transition Is a Total Con: Make More Money, Raise Rates and Kill Off Whole Industries; That's the Plan.

In 2012, AT&T filed a petition with the FCC to begin the process of shutting off whole areas of America's networks, as well as removing all obligations, oversight and regulations. AT&T doesn't say that, of course. They couch it in 'everything is going IP' -- using the Internet protocols as 'the next thing in communications,' even though "IP" has been around for more than over 15 years.

But truth be told, the IP transition at the FCC is not about technology; it is a con. America is the 'mark,' the sucker being played. The real reason for this ploy is to:

  • Use the government to do protect the companies' monopoly over the wire and have the government stop the government from ever investigating their business activities. For example, over the last 5-8 years, the FCC erased the obligations of the phone companies to supply basic data about their business practices so that neither the FCC nor the public can examine, monitor or even question the telcos business practices.
  • Kill off all competitors and obligations so that the company can make more earnings per share and increase their profits.
  • Carte blanche to do whatever they want, including collusion between their wireline and wireless divisions, or the ability to raise rates at will, or maybe not have to worry about the 'quality of service' they supply, or even be required to supply services to anyone -- line breaks. Too bad.

In order to do this IP Transition-Con, AT&T has added their usual, familiar digital carrot -- 'Promise them broadband' to sweeten the deal. AT&T has thrown in "Project VIP" into the mix, where AT&T claims they are going to be making a "multi-billion dollar investment."

AT&T's Blog, states:

Much has been written over the 12 months that have passed since AT&T filed its request for the Federal Communications Commission to oversee trials to facilitate the industry's continued transition from aging communication platforms and services to new services based fully on Internet Protocol ("IP")....

We have been very clear about our efforts to transform our network to one that is all Internet Protocol (IP). Our request for the Commission to oversee trials came on the same day we announced Project Velocity IP, a multi-year, multi-billion dollar investment plan to accelerate the historic national transition to all-IP networks and services...

AT&T doesn't care about upgrading the networks, as much as they care increasing earnings per share and helping to increase AT&T's profits. They even say as much:

According to AT&T's Press Release: November 07, 2012

Driven by Project VIP and assuming a stable economy, AT&T expects that during the investment period:

  • Earnings per share will grow in the mid-single-digit or better range, with an opportunity for stronger growth going forward.
  • Consolidated margins will expand.

In fact, this "multi-billion dollar investment" is really about "multiple new billion-dollar business opportunities", which include taking over industries like the alarm business, or replacing their wires with "Mobile Premises Solutions" -- a nationwide service designed to shut off the copper wiring and replace it with a similar service to the controversial wireless service, Voice Link, that was rolled out on the East Coast after Sandy by Verizon so that the company would not have to fix the storm-damaged copper wiring.

AT&T states:

Project VIP Supports New Growth Initiatives -- With business customers, AT&T expects Project VIP will strengthen its ability to pursue multiple new billion-dollar business opportunities in four key growth areas: strategic network services, cloud, security and mobility solutions.

  • AT&T Digital Life -- A nationwide all IP-based home security and automation service set to launch in 2013 that will let consumers manage their home from virtually any device -- smartphone, tablet or PC.
  • Mobile Premise Solutions -- This new nationwide service, available today, is an alternative for wireline voice service and in the future will include high-speed IP Internet data services.

How does any of this make sure that America, specifically AT&T's 22 states, gets their networks upgraded to very fast broadband everywhere? It doesn't. How does this help bringing cable competition or lower prices? It doesn't.

The real problem with this plan is that AT&T controls the states' Public Switched Telephone Networks (PSTN) utility wires, but at the same time, AT&T has been able to 'vertically integrate,' read cross-subsidize, their other businesses, (commonly known as 'affiliates") so that customers can only use the AT&T U-Verse branded Internet or broadband or phone or cable service over that wire. AT&T doesn't have to allow competitors to use these publicly funded networks. Moreover, this vertical integration gives them market power to add another line of business, such as the home monitoring, as well as the ability to close them down and take the business from thousands of smaller entrepreneurial companies.

The history of telecom includes other industries, from the answering services business (which includes voicemail) to the Internet Service Providers, where entrepreneurs started the businesses only to be closed down through this collusion of the incumbent phone company and the affiliates. Today when someone mentions the term "ISP," they usually mean the large companies, AT&T or Comcast, as opposed to the thousands of ISPs that brought America to the Internet in the 1990s.

We also have the too-cozy relationship of the AT&T's state-based utility wires and the wireless company. This allows AT&T to say: "We don't want to offer wired service in this area -- let's just give it to our wireless division," thus handing them a customer who may be forced into taking something or nothing.

And let us be clear -- the plan is to 'shut off the copper.' AT&T stated elsewhere that its Project VIP plan is really a plan to shut off about 25 percent of their 22 states and force customers onto wireless. And it is also a plan where only 40 percent of AT&T's entire 22 states get competitive wired broadband and cable services.

AT&T writes: (NOTE: AT&T elsewhere claims that they have 76 million locations.)

  • U-verse. AT&T plans to expand U-verse (TV, Internet, Voice over IP) by more than one-third or about 8.5 million additional customer locations, for a total potential U-verse market of 33 million customer locations¹. The expansion is expected to be essentially complete by year-end 2015.
  • 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.

Do the math. AT&T will have a total of 33 million locations by the end of 2015 -- which means after three years, starting in 2012, the company will have only 40 percent of their 22 states covered with TV competition. Meanwhile, a whopping 25 percent won't ever get properly upgraded and be forced onto wireless.

Should America Trust AT&T or Should AT&T be Investigated?

Did you know that AT&T was supposed to have 100 percent of their 22 states upgraded to at least 200Kbps by 2007? (1/5 of a Mbps) Though painfully slow, in order to secure the AT&T-BellSouth merger, AT&T again made 'broadband commitments' to make sure that everyone in their territories was going to be served as part of the condition of the merger.

Merger Commitments:

By December 31, 2007, AT&T/BellSouth will offer broadband Internet access service (i.e., Internet access service at speeds in excess of 200 kbps in at least one direction) to 100 percent of the residential living units in the AT&T/BellSouth in-region territory. To meet this commitment, AT&T/BellSouth will offer broadband Internet access services to at least 85 percent of such living units using wireline technologies (the "Wireline Buildout Area"). AT&T/BellSouth will make available broadband Internet access service to the remaining living units using alternative technologies and operating arrangements, including but not limited to satellite and Wi-Max fixed wireless technologies. AT&T/BellSouth further commits that at least 30 percent of the incremental deployment after the Merger Closing Date necessary to achieve the Wireline Buildout Area commitment will be to rural areas or low income living units.

An investigation by Huffington Post's Gerry Smith found that AT&T had not fulfilled its obligations. However, we could find no state that actually audited the companies' compliance or actually conducted a field-test to see if the company had done the required build outs by 2007.

Wait a second! This really screws up AT&T's entire IP transition story. If the company has already done these upgrades, which would then be capable of using VOIP (as it requires broadband), then why is there even a transition underway as everyone should already have been converted in AT&T's entire 22 state territories?

In fact, in granting the AT&T-BellSouth merger, then FCC Chairman Kevin Martin and Commissioner Tate, in a joint statement (3/26/07), proclaimed that the merger would help in the deployment of broadband and IP-enabled services.

The telecommunications market continues to be a dynamic one. New technologies and services are continuing to transform every aspect of our lives. The merged AT&T/BellSouth (AT&T) promises to offer consumers a wider array of IP-enabled services, including voice, data, wireless, and video services. In particular, the merger will enable the combined company to accelerate its deployment of broadband and IPTV in the BellSouth region.

We are pleased that some of these conditions should accelerate the deployment of broadband facilities and adoption of broadband service throughout the 22-state region of the merged company. For example, the applicants have committed to offer high-speed broadband services to all consumers in the combined territory by the end of 2007.

And Commissioner Michael Copps also noted it was to 100 percent of customers:

The merged entity has committed to offer broadband to 100 percent of the customers in its 22-state region by the end of 2007. There are no exceptions for sparsely populated areas; in fact, the company has committed that at least 30 percent of its new deployment will be in rural and low income areas.

But something is wrong. It would seem that this merger commitment, (which AT&T claimed was completed), directly contradicts the AT&T's Project VIP previous quotes in 2012, where the company claimed that "25 percent of AT&T's wireline customer locations where it's currently not economically feasible to build a competitive IP wireline network."

How can 25 percent not be 'economical' if 100 percent was already upgraded to 200 kbps, (even though this snail's speed should embarrass AT&T)?

But hey, trust us -- We are the phone company... sucka.