Open Letter to California about SB-649: You’re being Played by ALEC & AT&T Et Al.

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 saying: Do not give these companies any more deregulation, tax perks, and stop allowing the billions collected in continuous customer overcharging as well as stop all of the wireline utility cross subsidies of the wireless business.

Here’s 10 Reasons to Start Immediate Investigations. (This also summarizes a series of recent articles.)

1) The State Wireline Utility Customers are Paying Billions to Fund the Wireless Subsidiary.

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 wireline customers are funding the wireless build outs.

And this is not new. Fran Shammo, Verizon’s former CFO, told investors in 2012 that the wireless company’s construction expenses have been charged to the wireline business.

“The fact of the matter is Wireline capital—and I won’t get 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) This Proposed Bill Is a Con and It Is Based on “Model Legislation” Created by AT&T Et Al. and ALEC, the American Legislative Exchange Council.

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

“According to The Wireless Association, 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 Palmbeach.com reported on identical legislation in Florida in July 20117:

“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 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.

Worse, former Verizon attorney, now-FCC Chairman Ajit Pai, and former lawyer to AT&T, Verizon, and the CTIA, (The Wireless Association) now-new 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, post the merger with SBC, in 1997 everything was stopped, but the rates were never lowered; there were no refunds, etc.

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 a fiber optic wire within a half mile.

All of the deregulations gave the companies tax perks and rate increases with “price caps” – i.e., don’t examine the profits and free the monopoly services to get whatever profits can be gotten, but 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, and after 25 years, the company has 6% of their territories covered in 21 states with a fiber to the home service, which includes 650,000 apartments and condos.

4) Local Prices Went Up 138% Since 2008; Ancillary Services 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 nonlisted 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, especially in the home, for a wired line, is ridiculous.

5) The State has Not Done an Audit of the Companies 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.

The plan has always been to game the regulatory system and make claims that it wasn’t cost effective to upgrade the networks. And 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 it makes the companies more profits.

However, part of the plan is to privatize the publicly funded networks, known as Business Data Services; these are basic copper (and fiber) that are used for the wireless networks as well as the wires to ATM machines and banks.

8) ‘Shut Off the Copper’ and Replace It with Inferior Wireless because It Makes Them More Money

And 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.”

It is now all lines in any location that the companies want the right to shut off. Ironically, and as we wrote, AT&T is manipulating the accounting of the lines in service – as U-Verse is a copper to the home service. It 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 Op Ed 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.

But, combined with the current FCC’s proceedings, it removes all remaining regulations and obligations to offer wired service in the state and replaces it with wireless.

10) 5G Is the Broadband Carrot of the Month: What Is the Truth about Wireless Service?

And 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.

And this litany of issues is part of an endless stream of complaints on the Verizon site, but there are lots of other sites.

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

“UNACCEPTABLE SERVICE EXPECT ANSWERS!!!!!!
“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 spoke 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 future –the states and the federal government conspire with the companies to trash the state utilities, shut down the retail wired networks and push customers onto inferior, less reliable and 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.

There should be immediate investigations. Those who vote for this bill should be challenged at the next election and questioned why they work for AT&T et al. and not their own constituents.

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