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Does Verizon owe you money?


Op-ed  By Scott Bradner,


Network World, 07/10/06


Would it surprise you to hear that the telcos have been ripping you off for years, promising all sorts of advanced services, as long as regulators do them a favor or two - and then failing to deliver? This is the premise of $200 Billion Broadband Scandal, a new book by Bruce Kushnick. I will say that the idea did not surprise me.


The 400-page book is not a dispassionate exploration of the topic. It is more a polemic than a reasoned, scholarly treatise. This is not to say that it isn't very well researched or that it doesn't present a compelling picture of carrier perfidy and regulatory complicity. You can get a good summary of the book's arguments in a guest column Kushnick wrote for The Jeff Pulver Blog that has the provocative title "'Net Neutrality is Hogwash." (It's hogwash because the current 'Net neutrality debate does not go far enough.)


The premise of Kushnick's book is that for many years telephone companies have told regulators they would roll out high-speed, two-way data connectivity in exchange for regulators increasing telecom tariffs. The carriers promised they would use the extra money to deploy open-access, broadband data services. There are many examples of carrier promises cited in the book, including the one by New Jersey Bell to start deploying 45Mbps data service to New Jersey residential and business customers in 1996 and finish by 2010. New Jersey Bell got its money from the customers, but about 0% of New Jersey customers got the service. Whatever New Jersey Bell did with the extra money, it did not involve service deployment.


According to Kushnick, the average cost of the carriers' games to date is about $2,000 per customer, mostly from excess profits and tax rebates. When you look at other telcos across the country, the total is more than $200 billion, the book says. This is real money, to use the phrase attributed to the late Illinois Sen. Everett Dirksen. (It seems that Dirksen may not have coined the phrase after all).


The book points out that many of the plans the carriers put forward could not be built with the technology available at the time - or in some cases, even now. That did not stop them from making promises and getting regulators to buy in. And although technological reality caused a number of plans to be abandoned, I could not find an example of a carrier reducing its rates to what they would have been without the promise.


If you have been reading what the carriers are saying now in the 'Net neutrality debate before Congress, you will notice they are making threats instead of promises. Their threat: They will continue not to deploy what they have promised repeatedly to deploy. Note that their previous promises were not contingent on a nonneutral network.


So far, it appears that Congress and the FCC are following precedent and swallowing the carriers' tales of a future network utopia - just as long as the carriers are permitted to raise prices and rid themselves of any pesky requirement to be fair to users of the utopian network. Want to take odds on the level of deployment of useful technology in 10 years?


Disclaimer: Some people at Harvard study past utopias, but I do not know of any who study utopias that are the figments of telco lobbyists' imaginations, so the book review above is my own.


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