This is being presented in two parts.
Part II lays out an insidious, very under-the-radar plan. The FCC has created a series of 15 to 20+ separate, but interconnected proposed rules, regulations and actions to directly help AT&T and Verizon. And though it is not obvious from the outside, each proceeding (currently underway) is designed to work in concert. Unfortunately, the companies have helped to maneuver this takeover and so we now have an FCC voting block in place where only one party, defending the companies, can win. And killing off net neutrality is just one of many planned harms.
We will discuss some of the implications in a moment and connect the dots in Part II.
Part 1: The Takeover of the FCC and Creating a Voting Block
In every industry we hear horror stories of how the government agencies that are supposed to provide oversight of the companies and protect the public interest have been taken over by the industry.
A St. Louis Post-Dispatch editorial discussing the Environmental Protection Agency, (EPA), states:
“EPA Administrator Scott Pruitt is quietly dismantling decades of work done under Republican and Democratic presidents alike to protect the environment. If you voted for Trump because you wanted dirtier air and water, Pruitt is delivering. If you wanted industry insiders in charge of EPA divisions overseeing dangerous chemicals and pesticides, you've got 'em.”
And an article in Salon quotes Public Citizen’s president in an interview with the NY Times about the EPA.
“‘It amounts to a corporate takeover of the agency, in its decision-and policy-making functions,’ Robert Weissman, the president of Public Citizen, a government watchdog group, told the Times.”
At this point we can just substitute the abbreviation, “EPA” for FCC as the FCC, which has oversight over most of the phone and cable companies’ business – i.e., the wireline, wireless, satellite, cable, TV, Internet, broadband, phone and data service services—all communications services—has been captured.
Meet the FCC’s Gang of 3 Voting Block
Chairman Pai is a former Verizon attorney; Commissioner Carr worked with Verizon, AT&T, and the wireless and phone associations as a lawyer for Wiley Rein, and Commissioner O’Reilly is a friend of ALEC, which creates model legislation, mostly funded and designed for Verizon and AT&T. This “Gang of 3” has been moved into position and has been given a ‘voting block’ to speed along any proceeding.
Here’s a collection of articles we wrote or collected about the FCC’s Republican Commissioners and their friends and corporate ties. Click here to use the links.
Note: At the same time there are thousands of groups, from co-opted non-profits or fake astroturf (fake grass roots) groups, to paid ‘academics’ and pundits, not to mention politicians, all of whom are funded by the companies or their associations, cranking up the rhetoric.
An Insidious, Very Under-The-Radar Plan
At the core of all of this, the companies’ ‘wants and desires’ are now encapsulated in a series of current FCC proceedings, which, from the outside, do not seem tied together, but are designed to fulfill the primary goals:
Primary Goals: Become wireless-only entertainment companies, and to get there they will:
Shut off the retail wired networks and force customers onto more expensive wireless in the home and office.
And while these gifts and slights-of-hand are embedded in the current proceedings at the FCC, because this was designed by (or to help) AT&T and Verizon, at the same time, this is also the same current plan of ALEC, the American Legislative Exchange Council.
While none of this is new; it is now a sped up, concealed, heavily funded, very well coordinated plan and with the ability to control the FCC votes, the companies have been emboldened to ask the FCC for anything and everything, as they know that their friends at the FCC will, of course, oblige.
Ars Technica’s recent headlines detail that Verizon wants to stop all state broadband laws to control privacy and net neutrality and Comcast wants essentially the same thing, while the FCC wants to limit the broadband funding for low income families, especially to competitors.
- “Verizon has a new strategy to undermine online privacy and net neutrality. FCC should declare state broadband laws invalid, Verizon tells commission.
- “Comcast asks the FCC to prohibit states from enforcing net neutrality. Pressure builds on FCC Chair Ajit Pai to preempt state net neutrality laws.
- “FCC chair wants to impose a cap on broadband funding for poor families. Pai proposes Lifeline budget cap and new limits on which ISPs can get subsidies.” (i.e., the companies that control the wires (facilities based) would get the money and not ‘resellers’, those competitors who rely on the networks to supply service.)
At the end of the day, it’s all about the money. It should be about the state-based wired utilities, serving their state-based constituents or being held accountable as they have a franchise to offer services that gives them special perks, like the rights of way.
(Note: The ‘utility’ networks include the broadband fiber optic wires, including Verizon’s FiOS, and the wires to the cell sites, or the copper-to-the-home wires used for AT&T’s U-verse, or the ‘business data services’—regardless of what the FCC claims.)
AT&T and Verizon Wireless are Not Very Profitable without the Cross-subsidies.
This transition to ‘wireless’ from wired services has been going on for about a decade—and it has been one big con. Using actual financial reports from Verizon New York and Massachusetts with other company-supplied info:
(Note: The FCC used to collect basic financial info which was last published in 2007; it proves this happened in every state.)
- The companies that control the wires diverted billions of the state wireline utility construction budgets to wireless.
- At the same time, the wireless company is paying a fraction of what other ‘competitors’ pay to use the wireline networks.
- In fact, the “Local Service” networks show losses because these wireless companies failed to pay market prices for use of the networks and shoved the majority of the expenses into Local Service.
- The FCC’s own cost accounting rules have become distorted, causing these cross-subsidies. Based on how costs are allocated to different lines of business, the FCC ‘froze’ the expenses to reflect the year 2000 – 17 years ago. Over time, while Local Service revenues were 65% in 2000 and expenses were about the same percentage, by 2016, Local Service was only 23% of revenues, but still paid almost 60% of all expenses.
- Rate increases; Local Service customers were ‘harvested’ to force migration. Claiming that the wires were ‘losing’ money, the companies received continuous rate increases on all services so customers either screamed uncle and left or are gouged, especially if there aren’t any other serious choices.
- Rewrite America’s Broadband History. The FCC has an obligation to give an annual analysis of broadband and whether it is being deployed in a timely manner. This FCC rewrote history (as did earlier FCC administrations) and made no references to the fact that every state had plans to replace the copper with fiber optics, and even charged customers for upgrades multiple times, billions per state. And most states’ pricing is still inflated and was never reduced when the companies failed to upgrade or even maintain the networks, or the funds were diverted to other lines of business.
So, having made Local Service look unprofitable by allowing the subsidiaries, especially wireless, to get a free ride, and rewriting history, now the plan is to shut off the ‘retail copper’, but keep/privatize the other wires, known as “Business Data Services”, in use—then substitute wireless for the wires to the home using these wireline networks. But there are other ‘move to wireless’ perks.
- Shutting the copper kills off the unions who are attached to the wires; wireless is a separate legal entity.
- The controls over the wires gives the companies control over all of the other wireless companies’ services and prices.
- Pricing per gig, unlimited plans that are not unlimited, and overages are a formula to print more money as compared to an ‘all you can eat’ plan on say, a wired DSL service.
- No more maintaining or upgrading of the networks; no more obligations to provide service, and no oversight of who does or doesn’t get service.
- Wireless can now collude instead of compete with wireline.
Alongside proceedings to shut off the copper, the FCC has a series of proceedings to do ‘weed whacking’ of the cost accounting rules. The FCC has decided to get rid of requirement of the telcos to supply any financial data and they no longer have to keep financial books detailing their business because they are outdated and costly burdens. And it is clear that weed whacking the accounting rules is also being done to cover up the cross-subsidies that make Local Service look unprofitable or that wireless and special access are highly profitable through accounting manipulations, and not paying business expenses.
- 5G, Small Cell replacement of the wire is about removing regulations and obligations, not ‘new tech’.
5G doesn’t exist yet and it requires a fiber optic wire and will only have a range of a few blocks. But, it is now the new ‘tech’ shiny bauble used as a decoy to remove the remaining obligations and rules of the state utilities that control the wires.
How is it that the FCC wants to make a smartphone at 10Mbps down, 1Mbps up, the new American standard while, at the same time, we hear that the same companies are going to be offering gigabit speeds over 5G?
Bluntly, this 5G debacle and many proceedings in this ludicrous collection are to preempt state and city laws, including zoning regulations, from the treatment of poles and the locations of wireless antennas to the FCC proposing a preemption plan to help the phone companies ‘shut off the copper’ by overriding state laws.
Part II: The Trump-FCC Corporate Takeover: An Insidious, Very Under-the-Radar Plan Made Simple