North American Network Operators Group

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Re: What do we mean when we say "competition?"

  • From: Sean Donelan
  • Date: Wed Nov 16 02:34:07 2005

On Tue, 15 Nov 2005, Owen DeLong wrote:
> contractor and their rock-wheels).  As I understand it, up until
> the divestiture, AT&T received a certain amount of tax funding for
> each neighborhood they laid copper into.

Your information is incorrect.

> Finally, claiming that USF is just an explicit transfer is a fallacy.
> Look on your phone bill.  Have you ever seen anyone who receives
> a credit on the USF or HCR lines on their bill?  Everyone I've ever
> seen is a charge.  So, either the phone companies are pocketing
> that money, or, there's some group of citizens somewhere who
> are receiving what my friends and I are putting into that pot.

The people who receive a "credit" care called schools, libraries and rural
hospitals as part of E-Rate.  I have seen many people who receive credit
for E-Rate services.  I've helped schools and libraries to apply for
E-Rate services.

But most of the USF money goes to the so-called High Cost Funds, whose
basic principle is to try to provide phone service throughout the entire
United States even though it costs more money to provide phone service in
rural areas than urban areas.  That way people in rural areas don't pay
hundreds of dollars for a phone line.  You can see how the money is
distributed through the Universal Service Administrative Company.  This
is a post-AT&T divestiture activity, to try to formalize the pre-divisture
intra-company settlement process AT&T used to equalize prices across
the entire country.

Although the FCC now overseas the Universal Service Fund,the FCC doesn't
like to call it a "tax."  The USF is nominally paid for by ratepayers and
shareholders (depending on your point of view), not taxpayers.

> > So what is it exactly you think taxpayer funds paid for and should now
> > own?
> 1.	Most of the existing pre-1996 copper "last-mile" infrastructure

False, taxpayer funds didn't pay for most (i.e. more than 50%) of the
existing pre-1996 copper (or coaxial) last mile infrastructure in the USA.

There are some government owned/funded facilities in some municipalities,
but I think in most (i.e. more than 50%) cases MSOs and RBOCs paid to
install their own facilities or purchased them from a previous owner
(e.g. Western Union, RCA, etc).  AT&T has a long, not invented here
syndrome, and prefered to own its facilities.

> 2.	The right-of-way

Government owned right-of-way are non-exclusive.  Competitive carriers can
obtain access to public right of way from the local government. For
example,  Mountain View is negotiating with Google for non-exclusive
access to city-owned light poles.  Earthlink is negotiating with the
City of Philidelphia for access to public right of ways and public

Easments on private property are a more interesting issue, but generally
the FCC tends to rule in favor of competitive access, e.g. multi-dwelling
units and multi-tenent office buildings, but doesn't completely overrule
private property rights.

> 3.	Most of the B-Boxes

Not paid for by taxpayers.

> 4.	At least an easment for access to the MDFs if not the MDFs themselves.

Not paid for by taxpayers.

> 5.	The ridiculous amount of money granted to Pacific Bell as a result
> 	of A-95-12-03 where they actually convinced the PUC that converting
> 	from D4/AMI to B8ZS-ESF required them to completely replace their
> 	inter-co infrastructure and that they only had to do this to accomodate
> 	ISDN.  (At the time most of the D4/AMI infrastructure was deployed,
> 	the need for and superiority of B8ZS/ESF was well known and this
> 	was really just another example of Pacific Bell's passive aggressive
> 	attitude towards ISDN).

Not paid for by taxpayers.

> I'm sure if I reviewed the last 10 years of rulings I could find other
> examples of Pacific Bell/Pacific Telesis/SBC receiving sbusidies disguised as
> rate-hikes from the California PUC.

Again I think you are confusing taxpayers with ratepayers and
shareholders.  Just because the government controlled the rates
charged by a company, does not make them taxes.