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The Telecom Scam: 5 Behemoths That Strangle Innovation and Ensure You Pay Too Much for Bad Service

America’s communications system is in crisis, hijacked by a handful of giant companies coddled by the agencies that are supposed to regulate them.

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Its enormous wealth and smart strategic thinking has led it to introduce an ever-growing variety of services, products and capabilities. The Google octopus ranges from AdSense (ad placements) to Gmail, from its digitalized library of copyrighted books to the Android OS, from its acquistion of Motorola Mobile to the build-out of a 1-Gig fiber network in Kansas City – and even a smart, self-driving car venture. When you’ve got the bucks, have fun. 

The dark side of Google is whether it's become the corporate NSA. Google’s vast data archives capture and preserve every search inquire, every ad click-through and every g-mail message (including key words in the content). This allows it to not simply monitor users' online behavior, but – with sophisticated artificial intelligence software – it can “predict” individual users' usage patterns. More troubling, this vast data archive can be harnessed to meet “security” needs. (Google partnered with the CIA in a venture called “Recorded Future.”) 

Many critics wonder whether Google, like Facebook, is capturing too much data (i.e., personal information) about its users. Americans have long battled over the meaning of personal “privacy,” a cherished belief that while not formally in the Constitution has been repeatedly affirmed in Supreme Court cases as an implied right.  The looming question is: does one lose their right to privacy once they go online?

A series of ongoing incidents have upped the ante for Google. Its 2004 decision to accommodate the Chinese government's request to remove references to the 1989 Tiananmen Square massacre raised the concerns of many. It recently made a $500 million settlement with the Justice Department to avoid prosecution on charges that it knowingly accepted hundreds of millions of dollars in illegal ads from Canadian online pharmacies. Currently, it is facing a Federal Trade Commission antitrust investigation over whether it’s rigging its search and advertising system.

Most troubling, because it may well signal Google’s long-term strategy, it offered a joint proposal with Verizon to the FCC on the future of the net neutrality. The Electronic Frontier Foundation warned in no uncertain terms: “Unfortunately, … [it] included some really terrible ideas. It carves out exemptions from neutrality requirements for so-called ‘unlawful’ content, for wireless services, and for very vaguely-defined ‘additional online services.’ The definition of ‘reasonable network management’ is also problematically vague. As  manymanymany have already pointed out, these exemptions threaten to completely undermine the stated goal of neutrality.”    

This may well exemplify the difference between “Don’t be evil” and “Do no evil.”   

Gore's Vision: The Information Superhighway

In 1991, Al Gore proposed the “Information Superhighway” in which every home, school, hospital, library, business and government offices would be wired with fiber-optic cable, replacing the old twisted-pair copper network that had linked the country for more than a century. Gore and the telecoms promised that 100 million homes would have fast, two-way broadband by 2010. 

In the two decades since Gore’s proclamation, the communications trust has failed to deliver on this promise. Park Associates’ optimistic forecast projects that by yearend 2011 only 18 million U.S. households will subscribe to a fiber optical service.   

A more sobering assessment was provided in a FCC’s 2010 Internet access report. It found that of the 152.9 million Internet fixed and mobile broadband “connections” in the U.S., only 714,000 (0.5%) could support between 25 and 100 Mpbs and a whopping 35,000 (0.02%) offered over 100 Mbps service; in addition, there were only 4.1 million FTTP homes in the U.S., representing 2.7 percent.  

Nevertheless, since Gore’s proposal, the telecom trust has become enormously profitable, effectively blocking meaningful competition and leaving the U.S. and ordinary telephone, wireless and cable customers with inferior services. The cause of this failure is twofold: well-orchestrated and aggressive trust efforts and compliant oversight. Regulators, whether state or federal, legislative or oversight agency, are in the telecom trust’s pocket. And ordinary subscribers to one or more of trust service pays the price. 

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