It's Time to Break Up AT&T, Verizon, Comcast, Time Warner and the Rest of the Telecoms
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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.
This is the first in a series of articles to be published on AlterNet channeling the approach pioneered by Tarbell and her compatriots. This spirit needs to infuse 21st century journalism with a sense of critical engagement. It targets the telecommunications trust and has three explicit goals:
- Divest AT&T and Verizon of the wirelines they now control to improve service, thus bringing competition to the market and making sure that the nation's critical infrastructure is properly upgraded.
- Divest the big telecom companies of their wireless subsidiaries to engender meaningful competition.
- Divest cable operators of their content companies and open the networks to real competition, thus furthering democracy.
Divestiture will lead to increased competition, lower costs and better service. Two landmark precedents set the stage for the call to "break 'em up" -- the 1983 breakup of AT&T and the 1948 Paramount breakup of the Hollywood studios control over theatrical movie distribution. In short, it's time to break 'em up, again.
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A century ago the U.S. was wracked by a profound social crisis initiated by unprecedented industrialization. Unbridled capitalism was triumphant; ordinary citizens had no power, politicians were bought & paid for by the giant corporate trusts. Amidst this climate of oppression, a band of radical muckrakers emerged to challenge -- and, ultimate, overturn -- some of the tyranny of the trusts. As the 21st century takes shape, it is time for a new generation of muckrakers to challenge the trusts' conglomerate power.
Among the leading original muckrakers were Ida Tarbell and Lincoln Steffens. At the turn of the 20th century, Tarbell and Steffens published groundbreaking investigative reports in McClure's Magazine that led to two seminal books, The Rise of the Standard Oil Company and The Shame of the Cities. These works culminated in, respectively, the breakup of Standard Oil and good-government reform throughout the country. An insurgent presidential candidate, Teddy Roosevelt -- who actually named them "muckrakers" -- championed their critiques and helped change American politics and business.
Trusts now dominate the major sectors of the American economy, be it finance and banking, pharmaceuticals and health care, extraction and energy, agriculture and food or communications and the media.
Sadly, the breakup of most of the trusts is unlikely to happen given the power the giant conglomerates exercise over national political life. For example, we are still reeling from the nation's gravest financial crisis since the Great Depression. The banks once deemed "too big to fail" have only gotten bigger and more powerful. The well-intentioned legislative effort at financial reform, the Dodd-Frank Act, is turning out to be a fig leaf that conceals crises still to come.
However, a breakup of the telecom trust is feasible. It will return competition to American communications and media, thus lowering charges paid by citizens and businesses for overpriced yet inferior service. In addition, it will enhance the performance of the nation's telecommunications infrastructure. Most importantly, it will strength popular democracy. There is no social downside to such a breakup; the only losers will be the overpaid corporate executives and institutional shareholders.
The telecom trust is systematic ripping off the American consumer. Three examples are illustrative: