Why

Why Municipal Fiber internet

Few know about the history of American internet, and fiber optic deployments in America that we’ve paid for.

Credit to Bruce Kushnick, an outspoken telecom analyst for over 39 years fighting for internet advocacy.

History of Broadband

In 1934, the Communications Act passed.

This bill mandated that every home, office, school, and library was entitled to phone service, and this would be done by copper wire. These copper wires would be a state utility, making sure rural, urban and suburban locations would be served at ‘fair and just’ rates.

By the 1960’s, America developed one of the best communications networks in the world. The vast majority of Americans could easily sign up for phone service.

This was done by a monopoly ,  Ma Bell (AT&T) and broken up in 1982 to become AT&T, Verizon and Centurylink. 

Since then, Americans would pay over and over and over for upgrades of these state utilities, even though most of the money was diverted to help build out the companies’ other lines of business. Since then, the modern telecom utility business model formed:  charge more for less, and get away with whatever you can. 

Information Superhighway

In 1991, the Clinton-Gore ticket ran on deploying the “Information Superhighway”, which was a plan to have the state utilities replace the existing copper wires with a fiber optic wire. This would deliver a whole new world of services, including very-high-speed broadband and Internet. America should have been a fiber optic nation, completed by the year 2010.

During this time, copper wires were already in disrepair as they could have been in the ground since before the 1930’s or earlier. The telecom companies were spending their money everywhere else because they had a cash cow and a very friendly set of regulators; the state utility commissions do oversight of the state utilities and the FCC is responsible for ‘interstate’ services.

AT&T, Verizon and Centurylink realized that they could use this promise of a fiber optic ‘fantasy’ to raise rates and remove regulations (deregulation); so they lobbied to not have the government build this fabulous fiber optic future. Instead, they went state to state and claimed that they would replace this aging copper infrastructure with a shiny new glass-based, fiber optic bauble.

And we’re talking massive state and national hype: These facts are directly from the companies’ own annual reports and press statements.

  • AT&T California claimed it would spend $16 billion and have 5.5 million households completed with fiber by 2000.
  • SNET, which controlled Connecticut, (then owned by AT&T) was to have the entire state done by 2007 and spend $4.5 billion.
  • Verizon’s entire East Coast (from then Maine through Virginia) was supposed to have 12 million homes done by 2000 and the company would spend $11 billion.

List of ISP Scandals

  1. Information Superhighway State Commitments—charged to customers that were never built, from 1991 and counting
  2. Merger conditions, such as SBC-Ameritech’s fiber optic “Project Pronto”
  3. Merger conditions: AT&T-BellSouth’s commitment for 100% broadband coverage of 22 states
  4. Multiple state-based cable franchise rate increases for broadband
  5. Government subsidies, from the Universal Service Fund to the E-Rate
  6. Federal Connect America Funds
    State created separate ‘broadband funds’
  7. Added taxes supposed to be for broadband
    Charging customers for ‘other lines of business’:
  8. Special Access (also called “Business Data Services”)
  9. Charging customers to build the wireless cell sites
  10. Dumping wireless construction expenses into the utility caused losses that were used to raise rates.
  11. Companies didn’t pay basic state or federal income taxes because of claimed losses.
  12. Charging local phone customers for the majority of “Corporate
  13. Operations” expenses, which includes everything from the corporate jet to the lawyers and lobbyists defending the telcos’ interest.
  14. Increases on cable, broadband and internet because the companies failed to properly upgrade and compete
  15. Increases on wireless because the companies control the wires to the cell sites, including much of the wires used by competitors
  16. FCC-Cable companies’ deal called the “Social Contract” to raise rates for broadband starting in 1995

We Already Paid For It

Using million-dollar studies showing that if only the state laws were changed to give the companies more financial incentives, telecom companies would use taxpayer cash for new investments. Unfortunately, this was nothing more than rate increases on most services. And, as soon as the laws went through, the companies profits went from an average of 10-12% to 29%. The companies also took massive tax deductions and write offs; all money intended for replacing the existing copper wire of the state utility with fiber.