Corporate Takeover of the Trump-FCC Is Complete

by Bruce Kushnick, 11/09/2017 04:55 am ET; Link to original Huffington Post article

This analysis is being presented in two parts.

Part II lays out the rest of the 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. Killing off net neutrality is just one of many planned harms. We discuss, below, some of the implications and will connect many dots in Part II.

Part 1: The Takeover of the FCC and Creation of 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 industries they are supposed to regulate. (Note: this was reported fully in Norm Alster’s book from Harvard’s Edmond J. Safra Center for Ethics: "Captured Agency: How the FCC is Dominated by the Industries It Presumably Regulates").

In addition, 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 acronym, "FCC" for "EPA" 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 — has been captured by the industries it presumably regulates.

Meet the FCC’s Gang of 3 Voting Block

  • Chairman Ajit Pai is a former Verizon attorney,
  • Commissioner Brendan Carr worked with Verizon, AT&T, and the wireless and phone associations as a lawyer for Wiley Rein, and
  • Commissioner Michael O’Reilly is a friend of the American Legislative Exchange Council (ALEC), which creates model legislation, mostly funded and designed for Verizon and AT&T. This “Gang of 3” has been moved into position and comprises a ‘voting block’ that speeds 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.


Background on The Gang of Three and "Friends"

1. Ajit Pai, FCC Chairman

Former Verizon Attorney, Close Ties to ALEC. Rewrote the history of broadband and never mentioned that AT&T never delivered the fiber optic services in his home state—Kansas—but had state laws changed to charge phone customers for the ‘transition’.

  • Link to – FCC: I Do Believe We’re on the Eve of Destruction.
  • Link to – FCC Pai Gets “F” for Fake History of Broadband: Ever Hear of TeleKansas?
  • Link to – The FCC Wants to Hide All Controversial Cross-Subsidies and Manipulations of AT&T, Verizon and CenturyLink’s Financial Accounting.
  • Link to – FCC Chairman Pai Endorses Invasion of Your Privacy and Digital Stalking
2. Brendan Carr, FCC Commissioner

Worked at Wiley Rein as a lawyer for Verizon, AT&T, Centurylink, as well as the CTIA, the wireless association and USTA, the phone company association. Failed to disclose work done for these companies in congressional testimony.

  • Link to – Brendan Carr Omitted Critical Facts in His Testimony to Congress: He Worked for AT&T, Verizon, Et Al.
  • Link to – Regulatory Capture of the FCC: Stacking the Deck with the New Proposed Republican Commissioner Brendan Carr
3. Michael O’Rielly, FCC Commissioner

Close ties to ALEC and other ‘telco funded groups’. Pro 5G but never discusses it requires a fiber optic wire every few blocks.

  • Link to – FCC Commish Michael O’Reilly Tells ALEC to Help Squash Net Neutrality
  • Link to – AT&T, ALEC, FCC. The FCC’s plans are based on AT&T’s Petition, which is from ALEC Model Legislation.
FCC Advisory Committees

FCC Advisory Committees have always been stacked with telcos and paid ‘friends’.

  • Link to – The FCC advisory committees have been stacked
  • Link to – Verizon on the FCC Consumer Advisory Comm. (CAC) for 16 Years..?
Jeffrey Eisenach

"Empty the Swamp" really meant create new toxic dumps. Led the transition team: Consultant to Verizon for two decades in different capacities.

  • Link to – What to Expect from the New Trump FCC – A More Polluted Digital Swamp.
  • Link to – FCC Transition Leader Jeff Eisenach Works for Verizon, Not the Public.
  • Link to – How the FCC & Trump’s Transition Team Leader, Jeff Eisenach, Helped to Kill Competition in America.
  • Link to – Jeffrey Eisenach should be Purged from the FCC Transition Team as a Phone Company Lobbyist.
ALEC et al.

AT&T, Verizon control through ALEC and funding politicians. Model legislation is created that mimics the FCC’s plans, and then it goes to state-based politicians, funded by the companies, to pass the bills.

  • Link to – Don’t Believe Those Against Net Neutrality, Title II and Privacy—Funded by the Phone, Cable and Wireless Associations: USTA, NCTA, & the CTIA
  • Link to – AT&T, ALEC, FCC. The FCC’s Plans are Based on AT&T’s Petition, which is from ALEC Model Legislation.
  • Link to – California Wireless Legislation: Paid for by AT&T Et Al.

Meanwhile, thousands of groups, from co-opted non-profits or "astroturf" (i.e. fake grass roots) groups, paid ‘academics’/pundits, and politicians, are funded by the companies or their associations, and are 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 their primary goals to become unregulated Wireless-only entertainment companies . . . and to get there they will shut off the retail wired networks and force customers onto more expensive Wireless networks in their homes and offices.

These gifts and slights-of-hand are embedded in the current proceedings at the FCC, because this was designed by AT&T and Verizon. This is also the current plan of ALEC, the American Legislative Exchange Council. While none of this is new, it is now a heavily-funded, concealed, very well-coordinated plan.

With the ability to control the FCC votes, the Telecomm 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 would get the money and not ‘resellers’, the competitors who rely on the wires to supply service).

At the end of the day, it should be about the state-based Wireline utilities, serving their state-based constituents or being held accountable as they have a franchise to offer services that gives them special perks, like access to the public rights of way — but it’s not . . . it’s all about the money.

Note: ‘Utility’ networks include the broadband fiber optic wires, including Verizon’s FiOS, the wires to the cell sites, the copper-to-the-home wires used for AT&T’s U-verse, and all wires for ‘business data services’ — regardless of what the FCC claims.

AT&T and Verizon Wireless are Not Very Profitable without Fraudulent Cross-Subsidies.

The transition from ‘Wireline’ to ‘Wireless’ has been going on for about a decade —and it has been one big con job. Using actual financial reports from Verizon New York and Massachusetts with other company-supplied info, we have uncovered:

  • The Telecom companies that control the wires have illegally diverted billions of dollars from regulated state Wireline utility construction budgets to their unregulated Wireless entities.

  • At the same time, the unregulated Wireless entities are paying only a fraction of what other ‘competitors’ pay to use the, formerly public, Wireline networks.

  • In fact, the unregulated "Local Service" networks are falsely reporting losses because these unregulated Wireless entities have failed to pay market prices for use of the networks and have shoved the majority of the expenses onto the unregulated Local Service network entities. This is an illegal shell game that is aided and abetted by the FCC.

  • The FCC distorted its own cost accounting rules, 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, in 2016, Local Service was only 23% of revenues, but still paid almost 60% of all expenses.

  • 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.

  • The FCC, then, rewrote America’s Broadband History, in an act of fiction. 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 and made no references to the fact that every state had plans to replace the copper with fiber optics, and actually charged and collected from customers for upgrades multiple times — billions of dollars 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. (Note: The FCC used to collect basic financial information from the Telecom firms, but this was last published in 2007; it proves this happened in every state.)

By making Local Service look unprofitable by allowing the cross-subsidiaries for Wireless and by rewriting history, the Telecomms now plan to shut off the ‘retail copper wirelines’, but keep/privatize the other wires, known as “Business Data Services”, and then substitute Wireless for the wires to the home using these now-unregulated Wireline networks. This is quite a scam that provides all of the following perks for ‘Moving to Wireless’:

  • Shutting off the copper wires kills off the unions who are attached to the wires. Remember, the unregulated Telecom Wireless entities are separate from the regulated Telecom Wireline entities. The former shuns union labor.

  • Privatizing and assuming ownership and control over the public Wireline network gives the Telecom companies control over all of the other wireless companies’ services and prices that depend on this Wireline network.

  • Pricing data per gigabit, unlimited plans that are not unlimited, and overages are a formula for printing money — compared to an ‘all you can eat’ plan on say, a wired DSL, coaxial or fiber-optic Internet service.

  • This is a Telecom company’s wet dream: all of the benefits of being a public utility with none of the obligations. No more maintaining or upgrading of the Copper Wirelines networks; no more obligations to provide service, and no oversight of who does or doesn’t get service.

  • Wireless service can now collude instead of compete with Wireline service.

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 Telecom companies to supply any financial data and they no longer have to keep financial books detailing their business because they are "outdated and costly burdens."

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 actual business expenses.

The truth: 4G/5G, private, so-called "Small Cell" installations are designed to replace the existing public Wireline networks is much more about removing Telecom regulations and obligations, and much less about any over-hyped ‘new technology’. We are all getting played. The Captured Agency of the FCC is scamming the public by allowing this to happen on their watch. The FCC’s Gang of Three have their marching orders and they are executing them on 11/16/17.

5G doesn’t exist yet and it requires a fiber optic wire and will only have a range of a few blocks. 5G is the new ‘tech’ shiny bauble used as a decoy to remove the remaining obligations and rules of the state utilities that control the wires.

Why does the FCC want to redefine broadband as 10Mbps down, 1Mbps up, while we hear stories that 4G/5G are going to be offering gigabit speeds? This makes no sense. Most everyone involved in this scam — is lying. The rest are ignorant.

Frankly, this 5G debacle and the many FCC proceedings in this ludicrous 11/16/17 FCC collection of rulings are designed to preempt state and city laws — including zoning regulations — to steal access to public utility/light poles at below market rates and to meld private wireless antennas onto public property in order to transfer massive liability to the taxpayer.

Part II (coming soon): The Trump-FCC Corporate Takeover: An Insidious, Very Under-the-Radar Plan Made Simple