If the Regional Bell Operating Companies (RBOCs) had delivered on the promises they made in the early 1990s, almost half of America's households and the vast majority of the nation's schools would already be wired with high-speed fiber optic networks.
The Bells told regulators they would wire more than 44 million households by the year 2000. Then, in many instances, they used those promises to convince regulators to replace traditional rate-of-return regulation with alternative regulatory schemes.
The new regulatory plans gave the Bells more profits, ultimately making them some of the most profitable companies in the nation. Bell profit margins are more than double that of other regulated utilities and the major long distance phone companies and literally 167% above the profit margins of some of America's best-known companies.
Consumers have already paid over $45 billion in extra telephone charges, and continue to pay over $8 billion annually.
Today, only 5% of Internet users subscribe to high-speed Internet service, and a majority of those who do are connected via cable modems because the fiber optic networks were never built.
It was the growing demand for cable broadband that finally motivated the Bells to launch aggressive plans to rollout digital subscribe line (DSL) service. And now that the Bells have jumped on the high-bandwidth bandwagon, there is mounting evidence that they are doing everything possible to prevent competitors from entering the market.
If the Bells had delivered on what they promised, low-income urban neighborhoods and rural communities would have been wired by now, and the digital divide might have been avoided.
The Bells' long record of failed promises should be a warning to Congress to resist RBOC pressure to modify the Telecommunications Act of 1996 until there is much stronger evidence that robust competition has emerged in telecommunications and information technology.
Congress should hold hearings to determine how much excess profits the Bells earned as a result of their broken promises, and the money should be returned to ratepayers or used to support expanded access to information technology.
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