David Rosen and Bruce Kushnick discuss the ways in which telephone companies have bilked Americans for over $300 billion - increasing their profits while failing to deliver the services they promised.

The scam was simple. Starting in 1991, Verizon, Qwest and what became AT&T offered each state -- in true "Godfather" style -- a deal they couldn't refuse: Deregulate us and we'll give you Al Gore's future. They argued that if state Public Utility Commission (PUCs) awarded them higher rates and stopped examining their books, they would upgrade the then-current telecommunications infrastructure, the analog Public Switched Telephone Network (PSTN) of aging copper wiring, into high-speed and two-way digital optical fiber networks.

State regulators, like state politicians, are seduced by the sound of empty promises -- especially when sizable campaign contributions and other perks come their way. Hey, what are a few extra bucks charged to the customer every month for pie-in-the-sky promises? And who cares about massive tax breaks, accelerated depreciation allowances and enormous tax write-offs? The promises sound good on election day and nobody, least of all the voter, reads the fine print.

Few have the expertise necessary to decipher the many scams these companies have pulled as ineffective public utilities commissions do little to safeguard the public interest. This is the larger problem with embracing regulation as a solution for ensuring essential infrastructure benefits the many rather than the few. PUCs are inevitably "captured" by the industries they are supposed to regulate (think BP Gulf Oil Spill). Public ownership is a structural solution that offers fewer opportunities for massive companies to game the system to their exclusive advantage.

The article offers some in depth examples of how this regulation system has failed.

New Jersey state law requires that by 2010, 100 percent of the state is to be rewired with 45-mbps, bi-directional service. To meet this goal, Verizon collected approximately $13 billion in approved rate increases, tax break and other incentives related to upgrading the Public Switched Telephone Networks. To cover its tracks, Verizon submitted false statements year after year, claiming that it was close to fulfilling its obligations. For example, in its 2000 Annual Report, it claimed that 52 percent of the state could receive "45-mbps in both...

In an editorial for the October, 2010 issue, Scientific American explains "Why broadband service in the U.S. is so awful, and one step that could change it." This is an excellent shorthand explanation for the poor decisions of the FCC during the Bush Administration. Unfortunately, these decisions are being carried forward by the Obama Administration's FCC.

It was not always like this. A decade ago the U.S. ranked at or near the top of most studies of broadband price and performance. But that was before the FCC made a terrible mistake. In 2002 it reclassified broadband Internet service as an “information service” rather than a “telecommunications service.” In theory, this step implied that broadband was equivalent to a content provider (such as AOL or Yahoo!) and was not a means to communicate, such as a telephone line. In practice, it has stifled competition.

And the solution?

Yet, puzzlingly, the FCC wants to take only a half-step. Genachowski has said that although he regards the Internet as a telecommunications service, he does not want to bring in third-party competition. This move may have been intended to avoid criticism from policy makers, both Republican and Democrat, who have aligned themselves with large Internet providers such as AT&T and Comcast that stand to suffer when their local monopolies are broken. It is frustrating, however, to see Gena chowski acknowledge that the U.S. has fallen behind so many other countries in its communications infrastructure and then rule out the most effective way to reverse the decline. We call on the FCC to take this important step and free the Internet.

Well said. Read the whole the piece.

Last year, when the Berkman Study (pdf) by Harvard (commissioned by the FCC) revealed the secret behind impressive broadband gains in nearly every country over the past decade, we hoped the FCC would learn something from it. Maybe it did, and maybe it didn't -- what is clear is that it did not have the courage to embrace pro-competition policies.

Canada's telecom regulator, the Canadian Radio-television and Telecommunications Commission (CRTC) has shown more courage in confronting powerful interests that want to monopolize the future of communications.

They have decided to require the big telecom carriers share their network with independent ISPs in an open access type arrangement.

Until this decision, the established telecom companies could "throttle" third-party services, by slowing them down or limiting downloads.

In Canada, these huge companies also claim that such regulations will decrease their investment in next-generation networks, likely a hollow threat. Regardless, it is a strong argument for public ownership of essential infrastructure. How many communities should be denied next-generation communications because some massively profitable global company is having a snit with the regulator?

Far better for communities to be self-determined, by building their own networks. When networks are run as infrastructure, they are open to independent service providers, just as the roads are open to shipping companies on equal terms.

Canada's regulator has made a difficult decision - but as Karl Bode reminds us, let's wait to see if they actually enforce it.

Last month, Mark Sullivan wrote a column expounding on the obvious: deregulation of broadband service providers has failed to produce the promised competition, Americans pay more for less than peers in other countries, and this is an area where smart government policy would benefit everyone.

When it comes to broadband, I’m a socialist. Why? Because broadband service in the United States is currently provided by a cableco/telco duopoly, and, as such, is slower and more expensive than in most of the developed world, studies show. Because I don't believe the FCC can fix that lack of competition within the current regulatory framework, despite the ambitious goals set forth in its National Broadband Plan. Because a reasonably-priced alternative to cable or telco broadband might be just the thing to bring competition to the industry and spur U.S. broadband cost and quality to world-class levels. Because our connectedness increasingly dictates our our economic standing in the world: Broadband is as important to us as the interstate highway system--a public works project--was to Eisenhower-era America.

Good column.

Notice that the commenters at the bottom pile on against the idea - though they clearly have little idea what they are talking about. There has been no discussion of the government taking over networks owned by the private sector and there is little reason to believe local government would be more likely to violate privacy than a company motivated solely by profits ... in fact, I would argue the private sector is considerably more likely to violate privacy than local governments.

As for Brett Glass, his comments long ago proved that he lives in a fantasy world. In his small town, there are 9 broadband competitors! Well, at least we know where the competition is - it surely is not present in my community.