AT&T's Top 13 Broken Promises. DIRECTV Merger? 'Giga'-Me-a-Break!

AT&T must be investigated for its previous failures to fulfill basic commitments in prior mergers, especially the AT&T-BellSouth merger. And the states should go back and examine whether customers have been paying extra for decades based on commitments never fulfilled.
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If you live in any one of these 22 states, this story is about your broadband, Internet, phone and cable service from AT&T, as well as wiring of the schools, libraries and hospitals.

The current AT&T was created by the joining of:

  • Southwestern Bell (SBC) -- Texas, Arkansas, Oklahoma, Kansas, Missouri
  • Pacific Telesis -- California, Nevada
  • SNET -- Connecticut
  • Ameritech -- Illinois, Indiana, Ohio, Michigan, Wisconsin
  • BellSouth -- Alabama, Florida, North Carolina, South Carolina, Tennessee, Louisiana, Mississippi, Kentucky, Georgia
  • AT&T

AT&T's actions also impacted the rest of America. And this isn't about history; AT&T has proposed yet another merger, with the broadband 'carrot' of upgrading 100 cities with 1 Gbps, "GigaPowerSM" fiber optics -- Giga-me-a-break. Based on history, most of these are just going to be 'fiber-to-the-press-release'.

The facts reveal that AT&T (and its previous incarnations) have never, fulfilled basic merger conditions and has a policy of 'say anything' to get deregulatory concessions to remove regulations, obligations and oversight.

And, unfortunately, the FCC has never been able to create enforceable commitments, much less supply basic oversight, or even track the state-based broadband plans. In fact, many FCC administrations worked for the phone and cable companies and against the Public's Interests.

Let us be clear -- larger is worse, not better. In state after state, after every merger AT&T shut down or ignored any fiber optic broadband commitments (which customers paid for), such as in Connecticut (SNET) or California (Pacific Bell). Moreover, AT&T (then SBC) failed to compete out-of-region against what is now Verizon and Centurylink for wired services, (a condition of the SBC-Ameritech merger) and, based on AT&T's own statements, failed to supply 100% of the 22 states AT&T controls with minimal broadband services, (a commitment in the BellSouth-AT&T merger).

By 2000, around 12 million households should have been upgraded to fiber optics, including schools and libraries, and the combined companies should have spent over $30 billion to do it. By 2014, we estimate that AT&T has collected about $150- $200 billion in excess phone charges and tax perks since the 1990's to upgrade the state-based utility networks that should have supplied at least 45 Mbps (in both directions) to homes, offices, as well as schools and libraries.

And all of these maneuvers have bad consequences. For example, according to Ookla's Net Index, America is 25th in the world in broadband download speeds and 40th in the world in upload speeds, and in large part because AT&T pulled the ultimate bait and switch -- AT&T's entire 22 state U-Verse deployment (which we dubbed "Re-verse") is almost exclusively a copper-to-the-home service that relies on the old, in place, legacy, utility copper wires that AT&T complains needs to be 'shut off' in 25-50% of their territories so they can force customers onto their own wireless service instead of upgrading the utility networks.

Before ANY merger is agreed upon, we call on the FCC and the states to investigate how AT&T gamed the system by not fulfilling basic commitments in these previous mergers and the harms that were created throughout the US because of AT&T's actions.

Our new book, "The Book of Broken Promises supplies links to all of the data, statements and filings so that you, the reader, can corroborate these statements.

1)AT&T-Bellsouth Was to Have 100% of 22 States Capable of at least Minimal Broadband Speeds by 2007.

AT&T claims that it completed the AT&T-BellSouth merger commitments to have 100% of its 22 states delivering a minimum speed of 200 kbps in one direction. This speed was set by the FCC in the 1990s to set the bar so low that two cans-and-string could almost fulfill this requirement; it was done to inflate the number of broadband connections in America.


And AT&T signed documents that they had completed their commitments by 2007. However, compare this to the current AT&T statements in 2013-2014. DIRECTV claims that 15 million customers in the AT&T states still do not have broadband today.

"15 Million Customer Locations Get More High Speed Broadband Competition. AT&T will use the merger synergies to expand its plans to build and enhance high-speed broadband service to 15 million customer locations, mostly in rural areas where AT&T does not provide high-speed broadband service today..."

In fact, AT&T's own IP Transition Trial documents, filed with the FCC, claims that even after the trial in Carbon Hill, Alabama, at least 4% will still not have IP/broadband. And worse, in 2013, AT&T claimed that 25% didn't have IP wireline networks (broadband) and that after the trials, mergers, and proposed upgrades, they'd finally be able to offer a wireless substitute for broadband.

"In the 25 percent of AT&T's wireline customer locations where it's currently not economically feasible to build a competitive IP wireline network, the company said it will utilize its expanding 4G LTE wireless network -- as it becomes available -- to offer voice and high-speed IP Internet services."

Where are the FCC investigations? Isn't AT&T admitting they didn't have 100% completed by 2007?

2)SBC Was to Compete for Wireline Service Out-of-Region in 30 Cities by 2002 -- Never Happened.

The SBC press release states:

"Whitacre Calls SBC-Ameritech Merger 'Critical' for Nationwide Competition."

We quote testimony: Before the Antitrust, Business Rights and Competition Subcommittee of the Senate Judiciary Committee, by Edward E. Whitacre, Jr. Chairman & CEO, SBC Communications Inc. May 19, 1998.

"Under the "National-Local" strategy, the new SBC would enter 30 U.S. markets outside its traditional territory, competing with Bell Atlantic, BellSouth, MCI/WorldCom, AT&T and others for business and residential customers by offering a full range of services, including local and long distance. Combined with the top 20 markets the two companies currently serve in their regions, this strategy would give the combined company a presence in the nation's top 50 markets that would be backed by a state-of-the-art nationwide voice and data network, and a growing international network."

In 2002, we filed a complaint with Congress to investigate. We had called reporters around the country and NOT ONE reporter knew of any SBC services being offered in the city with any media campaigns or mailings, etc.

And why? Well, the FCC, under then-chairman Michael Powell (now the head of the cable association, NCTA) had shredded commitments in the fine print. Only three customers were required in any city to fulfill the out-of-region commitments.

Example: SBC's press release stated:

"On April 9, 2002, the SBC notified the Commissioner that it had installed by April 8, 2001 local exchange switching capacity and was providing local exchange service to at least three unaffiliated customers in the following 10 markets: Baltimore, Bergen-Passaic, Middlesex, Nassau, Newark, Orlando, Salt Lake City, Tampa, Washington DC and West Palm Beach."

I could sign up more people at a bar by offering a free round of Jell-O shots than this incredibly sleazy fine print commitment.

The Mergers Killed the Fiber Optic Deployments in America.

Then we have the closing of fiber optic broadband deployments that were underway in every state SBC (now AT&T) took over.

3)Pacific Telesis -- was to spend $16 billion on 5.5. million homes in California by 2000. After the merger in 1997, SBC shut down everything being built and never spent about $15 billion.
4)SNET, Connecticut -- was to spend $4.5 billion and to have 100% completed by 2007; SNET started rolling out cable services over fiber and after the merger everything was abandoned.
5,6,7,8, 9) Ameritech -- claimed it would have 6 million households wired by 2000. Illinois, Indiana, Michigan, Ohio and Wisconsin -- all had commitments to build out fiber optic networks, and some states included schools and libraries. All we able to get state 'alternative regulations' to fund these upgrades and they started to roll out vanilla cable service; The hatchet came after the merger, where the entire five-state region's upgrades were sold off to WOW, a small cable provider.

Ohio Bell, part of Ameritech, had state laws changed based on claiming they would be wiring schools, libraries and hospitals and spending $1 billion on the construction.

Ohio Bell, Alternate Regulation Plan, September 20, 1994

"21. INFRASTRUCTURE COMMITMENTS The Company's infrastructure commitment in this Plan shall consist of the commitment to deploy, within five years of the effective date of the Plan and within the Company's existing service territory, broadband two-way fully interactive high quality distance learning capabilities to all state chartered high schools including vocational, technical schools, colleges and universities; deploy broadband facilities to all hospitals, libraries, county jails and state, county and federal court buildings..."

10) In Texas, one of SBC (Southwestern Bell) original states, (now AT&T) committed to spending $1.1 billion on educational institutions, etc., as part of projects funded by the Telecommunications Infrastructure Fund -- with speeds 45 Mbps, as of 1995.

"On customer request, the electing company shall provide broadband digital service that is capable of providing transmission speeds of up to 45 megabits per second or better for customer applications and other customized or packaged network services (private network services) to an entity described in this section for their private and sole use except as provided in Subsection (d) of this section:
(i) educational institutions, as that term is defined in Section 3.605 of this Act;
(ii) libraries, as that term is defined in Section 3.606 of this Act;
(iii) nonprofit telemedicine centers of academic health centers, public or not for profit hospitals, or state licensed health care practitioners;
(iv) public or not for profit hospitals."

11) Closing the Networks to Competition -- Promise them 100 Mbps Fiber Optics, 2002.

In order to close the networks to direct competition, which were opened under the Telecommunications Act of 1996, then-SBC told the FCC that it would roll out 100 Mbps fiber-to-the-home services if only the FCC got rid of those pesky competitors.

Then-FCC-chairman Michael Powell wrote, in October 2004:

"The networks we are considering in this item offer speeds of up to 100 Mbps and exist largely where no provider has undertaken the expense and risk of pulling fiber all the way to a home.

"SBC has committed to serve 300,000 households with a FTTH (fiber-to-the-home) network while BellSouth has deployed a deep fiber network to approximately 1 million homes. Other carriers are taking similar actions."

Never happened.

12) Re-verse: The "Copper-to-the-Home" Service.

As soon as the ink was dry on the closing of the networks, AT&T announced they were doing 'fiber-based services', which was a euphemism for -- a "copper-to-the-home" service, with fiber optics in a box within ½ mile of the location. And they would take the money from the original construction budgets to upgrade the state utility; it was not 'extra', added dollars.

Instead, AT&T simply decided to use the existing, legacy, old, copper wires and added some new technology. But, in this 'say anything' world, AT&T keeps repeating that U-verse is 'fiber based'. One example:

"Welcome to the Evolution of Digital TV, Internet, and Voice: "AT&T U-verse® includes fiber optic technology and computer networking to bring you better digital TV, faster Internet, and a smarter phone. Bring it all together by customizing your own bundle now."

13) AT&T's Press Release: "AT&T Eyes 100 U.S. Cities and Municipalities for its Ultra-Fast Fiber Network."

In this latest round to use broadband as a 'carrot' to push through the merger and get more deregulation, AT&T's new plan includes "GigaPowerSM" fiber optic-based cities.

"DALLAS, April 21, 2014 - AT&T today announced a major initiative to expand its ultra-fast fiber network to up to 100 candidate cities and municipalities nationwide, including 21 new major metropolitan areas. The fiber network will deliver AT&T U-verse® with GigaPowerSM service, which can deliver broadband speeds up to 1 Gigabit per second and AT&T's most advanced TV services, to consumers and businesses. AT&T will work with local leaders in these markets to discuss ways to bring the service to their communities."

But, notice that the last line includes "will work with local leaders ... to discuss..."

Giga-me-a-break. This is pure fantasy. AT&T failed to upgrade the states where customers have been paying for decades for fiber optics, and here is just another reminder that we made a serious mistake. When I checked this announcement, (See chart) AT&T had only 1 city, Austin, "already servicing with fiber today".

Had the state commitments been enforced and upheld, America would have already been a fiber optic nation. And with a starting point of bi-directional 45 Mbps speeds, we should have been a Gigabit nation by now.

AT&T must be investigated for its previous failures to fulfill basic commitments in prior mergers, especially the AT&T-BellSouth merger. And the states should go back and examine whether customers have been paying extra for decades based on commitments never fulfilled.

But this brings up a much larger question -- Why shouldn't we dismantle the current AT&T? It's too big to succeed, has overcharged customers by about $150-200 billion (which continues to be collected), pulled a massive bait and switch, failed to bring competition (which would have lowered prices), and, in short -- harmed America.

Let the investigations begin.

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