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It's Time to Break Up AT&T, Verizon, Comcast, Time Warner and the Rest of the Telecoms

Today's telecoms provide overpriced and inferior service, and are systematically overcharging the hapless American consumer.

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  • 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.

The Reagan administration was fiercely divided over the breakup of AT&T, yet pursued divesture until it was accomplished. As with most matters of state, Reagan couldn't care less; however, his public identity was ideologically committed to "competition," thus putting him publicly on the side of the trustbusters. Nevertheless, many within his inner circle had close ties to AT&T and sought repeatedly to kill the court challenge. As Steve Coll shows in his informative book, The Deal of the Century, strong public and media pressure, a resolute anti-trust prosecutor and a committed federal judge sealed AT&T's fate.

Ironically, Reagan's antitrust push for "deregulation" was designed to "open the networks" to competition. Today, the telecom trust has turned "deregulation" on its head, embracing it to protect incumbents from competition and to keep the networks closed.

In every ad, Americans are told the nation's communication's system is the best in the world. The truth is quite different: we are getting inferior services at higher rates with less competition. Most disappointing, the U.S. Congress, the FCC and PUCs have been complicit in maintaining this fiction, thus facilitating the fleecing of the American public.

According to Open Secrets, the "telephone utilities" spent $43.2 million on lobbying in 2009. Corporate representatives and hired hacks have effectively taken over many "captured" federal and state regulatory agencies. With appropriate mea culpas to the public good, they blindly approve rate increases, massive tax breaks, accelerated depreciation allowances and mergers that further consolidate the telecommunications monolith. The FCC is effectively ending net neutrality.

Making matters worse, America is falling behind as a post-industrial nation, the result of the telecom trust's self-serving profiteering. In a June 2010 report, Europe's Organization for Economic Co-operation and Development (OECD) ranked the U.S. 15th in "broadband" subscribers. Adding injury to insult, according to Akamai, a leading technology services company, the U.S. ranked 22nd globally in average connection data rate speed, averaging only 3.8 megabytes per second in Q-4 2009. In comparison, Korea's average data rate was nearly three times faster (11.7-mbp/s), Hong Kong's more then twice as fast (8.6-mbp/s) and even Romania had an average rate of 7.2-mbp/s. U.S. service is pathetic.

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The consolidating "telecommunications trust" consists of the dominant duopoly of telephone and cable companies as well as the wireline and wireless content distribution conglomerates. It is ripe for disaggregation.

America's regulatory policy, which has promoted mergers and acquisitions rather than meaningful competition, has encouraged the trust to take over communications with harmful results. Two disturbing facts illustrate the power of the trust:

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