Time to Break Up the Telecom Giants
Past time, really. Here, Bruce Kushnick (one of the best analysts on communications policy around) and David Rosen lay out the quite rational (and democratically essential) reasons why.
At the dawn of the 20th century, the oil pipes defined America. As the 21st century emerges, the information pipes define America and the world.
A century ago, a courageous muckraker, Ida Tarbell, wrote a series of articles that lead to the breakup of Standard Oil, which had become a trust controlling the energy and associated industries to fix prices, restrict competition and harm the nation.
Today, the “communications trust” — AT&T, Verizon and the major cable companies of Comcast and Time Warner — controls the two wires and the wireless networks that link the nation’s homes, businesses, schools and other institutions. The communications trust has failed America. A few examples illustrate this failure:
* America is now 15th in the world in broadband. While Hong Kong and other countries are rolling out 1 gigabit speed services, America’s average is a mere 5 mbps (i.e., 1,000 mbps = 1 gigabit).
* Americans paid over $340 billion for broadband upgrades that never happened; by 2010, America should have been completely upgraded with fiber optic services to every home.
* The FCC approved Comcast’s acquisition of NBC-Universal, foreshadowing a likely wave of integration of transport or carriage and content.
* Together, AT&T and Verizon control 80 percent of all wireless services and AT&T is now attempting to close down one of the only remaining competitors, T-Mobile.AT&T has proposed a major rate increase, known as “broadband caps,” on high-volume video distribution targeting initially heavy movie users. This sets the stage for a two-tier pricing model that could effectively end net neutrality. The full effect of these and many other actions by the trust, working through “captured” FCC and state public utilities commissions (PUCs), will be the erosion of Universal Service, further harming those most vulnerable.
———–
The telecom trust is systematic ripping off the American consumer. Three examples are illustrative:
* The telephone companies have pocketed an estimated $340 billion — or about $3,000 per household through hidden rate hikes, depreciation allowances, write-offs and other schemes; Al Gore’s promise to build out a truly 21st century fiber-optics infrastructure remains unfulfilled.
* AT&T, Verizon, T-Mobile and other giant wireless companies saved an estimated $8 billion on wireless spectrum by claiming to be “very small businesses.”
* Comcast, Time Warner and other cable companies received about $46 billion — $600 per subscriber — by promising to upgrade to fast broadband, through what is known as a “Social Contract,” to subscribers’ homes as well as public institutions like schools and libraries; this promise remains unfulfilled.Forgotten today, the breakup of AT&T took nearly a decade to wind its way through the courts. It began in 1974 with MCI’s anti-trust lawsuit. The suit was picked up by the Carter administration; it charged AT&T with violation of the Sherman Antitrust Act. The suit charged AT&T with monopolizing long-distance service and equipment manufacture largely through the exclusionary practices of its local operating companies. At that time, AT&T was America’s largest corporate and, in 1956, during the Eisenhower administration, it had successfully suppressed a similar antitrust suit.
