$300 Billion Broadband Scandal (2009) [pdf]

What does "allow the Bells to enter long distance more than upgrade America's networks" mean? I can't parse that jargon.

Edit: "Bell telephone companies, largely to serve the growing market for data transmission and Internet access, are trying to enter the long-distance telephone market denied to them in the order that broke up AT&T in the 1980’s." http://praxagora.com/andyo/wr/bell_application.html

Edit: I still don't get it. Why was it denied?

It was part of the anti-trust case that broke up AT&T in the 80s and broke up local phone service into the baby-Bells. They were restricted from entering the market for long distance phone service as part of the deal.

The author is arguing that the primary purpose of the Telecom Act of 1996 wasn't to upgrade data networks, but rather deregulate them so that they could enter the long distance market. Given that AT&T and MCI ended up getting bought by two of the old baby-bells, this argument might have some merit.

kushnick: the text you included with the submission is not displayed because HN displays the text of a submission only if there is no URL.

kushnick's text is reproduced below:

In the previous thread there was a discussion to give the details of how the phone companies were able to charge customers excess profits and get tax perks that were supposed to be used to upgrade the networks. This book -- link attached --- has a description of how we calculated the numbers -- though it was written in 2004 - the 20th anniversary of the break up of AT&T.

We have a new book coming out where we update most of the stats, but essentially, the phone companies were able to claim -- en mass --that they were going to replace the copper wires with fiber starting in 1991, and from 1993-to about 2005 they did nothing (with some exceptions) but they were able to get state laws changed to do funding of the upgrades. No state ever went back and examined the commitment and got refunds—so all rate increases are based on the original ‘commitments’—and changes in the law.

In 2005, after they closed the networks to direct competition they started to do new upgrades-- "FiOS-Verizon" and AT&T, which simply used the old copper wires, added some remote terminals and called it U-Verse.

Yet, Verizon and AT&T were able to charge basic POTS customers -- phone customers in most states for upgrades-- again. -- even if they will never get it.

Our new report on Verizon New York shows that the 'affiliate companies, such as Verizon Online or Verizon Wireless, are able to use the networks and get expenses paid for by regular phone companies-- even though Verizon had announced no more upgrades http://newnetworks.com/verizonfiostitle2/

The cringley numbers are also our stats.

The one thing to keep in mind is that we've been tracking this since 1991-- and so every year the numbers are going to increase.

... thus differing amounts based on the date.

One of the reasons that Bell was broken up in the first place was because they wouldn't allow competitors with cheaper long-haul rates for long distance calls to patch into their interconnects and thus offer their services to Bell customers. It sounds like as a result of the settlement that broke up the monopoly the baby bells had some sort of restriction on providing cross-country or inter-regional service. The author is contending that the 1996 legislation, lobbied for by the telecom industry, was more about removing that restriction than actually motivating them to provide better service.

It's history that goes /way/ back to the circuit-switched phone call days, and monopoly behavior. Here's my take on it:

To stop the high-priced no-progress monopoly behavior of the old AT&T in the long-distance telephone market AT&T essentially owned, the US sued AT&T, resulting in a consent decree settlement in 1984 where AT&T divested itself of 70% of its assets in order to retain its then-highly-profitable long distance business and its Western Electric switchgear business [1].

Competition was opened in long distance; prices and eventually profits went to commodity levels. Switchgear too; Western Electric gear was very expensive; competitors such as Nortel [2] and Digital Switch Corp (later DSC) [3] flourished for a while then crashed in 2001 as fiber and competition made long distance so cheap.

Meanwhile, the local telcos remained monopolies and thrived, merged, and eventually one of them (SBC) bought out several others and the old AT&T while others became Verizon.

But before all that consolidation (and the telecom crash [4]), the local "Bells" (telcos) argued for a return to enter the coveted Long Distance market. They don't have that for regulated landline service, which itself is now dying.

Long story short: Beware a monopoly if you're a customer, consolidate to become a monopoly and complain of regulations if you want to control a market.

EDIT: Moved to proper position as a reply

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[1] https://en.wikipedia.org/wiki/Breakup_of_the_Bell_System

[2] https://en.wikipedia.org/wiki/Nortel

[3] http://www.fundinguniverse.com/company-histories/dsc-communi....

[4] http://www.economist.com/node/1234711