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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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The five profiled companies – AT&T, Verizon, Comcast, Time Warner Cable and Google – suggest the practices of the leading companies that make up the communications trust. Their respective efforts to expand their scope of business and to offer new services are intended to increase market share, maximize profits and restrict competition.   

Three of the more significant consequences of these efforts are:  

  • Industry consolidation fuels collusion. AT&T and Verizon, along with the smaller cousins in the cable industry, not only own the wireline and wireless networks, but cut deals for content from the same handful of giant media conglomerates that are in bed with the cable operators. 
  • Consolidated industry power leads to regulatory capture. One has only to examine the “experts” serving at the FCC’s various advisory committees to understand that the phone and cable companies have stacked the deck. The head of the Technical Advisory Committee is the former head of the wireless association and cable association while the head economic adviser on the National Broadband Plan had worked for multiple astroturf groups and trust-funded think tanks.
  • There’s no “balance of forces,” no one taking up the fight. Prior the mergers following the 1996 Telecom Act, AT&T and MCI represented a modicum of competition containing the markets' monopolisic impulses. While not as well-funded as the Bell operating companies, the two long-distance carriers were a stop-gap force. Today, there’s no balance. The cable companies lobby with the phone companies opposing net neutrality and other issues; Google, Apple and Microsoft have deals with the telcos. There is nothing on the horizon to stop the oncoming train.

The outcome of these consequences is scandalous: the nation’s telecom network is stuck!   

In place of Gore’s vision of high capacity, two-way fiber-optic system, the telecommunications infrastructure is being “dumbed down” to a lower-performing but more convenient wireless services. This is most evident in AT&T’s decision to not properly upgrade its network in 22 states. After repeated commitments to rewire these states with a fiber-optic network so as to secure various mergers, rate hikes and tax breaks, it has instead maintained its same, inferior copper wiring as the basis of its “advanced” U-verse service. 

In similar fashion, Verizon has failed to invest in infrastructure while continuing to raise rates. For example, in New York State it has benefited from an 80 percent rate increase since 2005. In New Jersey, it committed to a 100 percent fiber upgrade by 2010 and, since 1992, has received an estimated $10 billion to cover these costs.  Sadly, it has slowed its fiber optic construction and shifted construction budgets to wireless. 

The inferior quality of America’s telecom system is one more symptom of the nation’s deeper structural crisis. The “regulators” who should have guided the nation’s telecom development to realize Gore’s “superhighway” have been effectively taken over by the telecom trust. The former overseers became subservient stooges, blindly approving rate increases, massive tax breaks, accelerated depreciation allowances and mergers that further consolidated the telecommunications trust – and degraded the quality of the nation’s communications network.   

Most shameful, following the FCC’s approval of the Comcast-NBCU merger, one of the Republican members took a well-paying job at Comcast. As a great American once observed during the now legendary Senate Army-McCarthy hearings of 1954, “Have you no shame?”

To the communications trust, and its regulatory handmaidens, one must ask: Have they no shame? 

David Rosen is a regular contributor to CounterPunch and the Brooklyn Rail; he can be reached at drosennyc@verizon.net. Bruce Kushnick is a telecommunications industry analyst who regularly reports for Harvard Nieman’s Watchdog and is founder of New Networks Institute; he can be reached at bruce@newnetworks.com.

 
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