Teletruth Research & Audits ("TRA") presents: The Municipality Defense Package.

Right now a major topic on the agenda of communities (municipalities, towns, villages, counties, et al) in America is how best to upgrade their communications infrastructure with new broadband technologies, including fiber to the home or business premises, or perhaps Wi-Fi services.

However, there are obstacles to this. Will the incumbents (translation: the phone companies (AT&T, Verizon, BellSouth, Qwest) or cable providers) upgrade your community anytime soon? History shows that the phone companies, despite federal and state regulation, can't be trusted to deliver. In many cases the funds for such build-outs have already been collected via years of additional charges laden onto phone bills, yet no action has been taken.

Meanwhile, many cities are also having to deal with legal actions taken against them for wanting to deliver broadband, or when they question or have a problem with what the phone companies plan to offer or the terms of those agreements. In other municipalities across the US, communities feel that they have waited long enough for the incumbent to deliver and have decided to take matters into their own hands.

Recently in a vast display of bravado and hubris, Verizon, AT&T, Qwest and BellSouth have suggested that they should have 'nationwide' franchises, or in the case of Massachusetts, California, Illinois or New York, the phone companies want 'state-wide' franchises. This would eliminate most local control by the communities and stifle innovation and competition. And these franchises would give the Bell companies the right to pick and choose which communities get service and to have control over the terms of service.

And let's talk reality ---While Verizon and AT&T claim that they are going to rewire or upgrade the networks this time, Verizon's FiOS is only in ½ million homes, only 100,000 have video competition. AT&T's Lightspeed is not even being deployed with full implementation yet. Is your muni waiting for these companies that have a 20 year record of no shows?

Worse, these networks are 'crippled' and inferior networks to what was promised in 1992, and can't compete globally with what's being offered today in Asia. The networks that customer funded were 'open' to all competition and 'ubiquitous', available throughout their states equally to rich and poor, rural, urban, and suburban areas. FiOS and Lightspeed are 'closed' to competition. Also, in Korea and Japan today, customers are getting 100 Mbps speed in both directions for about $40.. This is 100 times faster than DSL and more than double the speed either Verizon or AT&T will be deploying anytime soon.

America is 16th in the world in broadband, and the phone companies' current plans will not dramatically change our world ranking, much less drive innovation and America's technological edge to compete globally.

Defend Yourself. Help America go on the offensive to get America wired.

Although the incumbent phone companies may be an impediment, there are increasing numbers of municipalities forging into this new ground.

For many of us it's still second nature to "trust" the phone company, but over the last 20 years the phone companies have left a trail of broken promises. Your community has a right to know what it is owed by the phone company both in terms of money and infrastructure. TRA can provide you the ability to ask the right questions and not be turned away.

Broken infrastructure promises are only one of the eight issues this paper will raise. There are a host of other financial sweet spots that a municipality (or group) could exploit in order to create new found monies for the community, not to mention help to fund any new deployments. For example, many municipalities are being overcharged through mistakes and over-billing on telecommunications expenditures, and an audit can help to reduce the current costs or to receive substantial refunds.

In short, this White Paper is dedicated to "outing" the Bells' vulnerable economic spots with the hope that Teletruth's experts can work with your community to take actions that will result in direct money to your community, as well as a offensive strategy to help as a defense against the harmful actions of the incumbents.

The White Paper supplies a series of options:

The Municipality Defense Package Consists of 8 Audits and Investigations that Need To Be Done Today.

1) Audit the Phone Bills for Mistakes. Get Refunds and Reduced Bills.

An audit of the District of Columbia's phone expenditures found over $10.4 million in charges that should not be on the city's phone bills. Meanwhile, Teletruth's audits have found that over 90% of all businesses have missing circuits, tariff violations and other problems. Thus, you can get added revenue to your community when refunds are made.

The industry standard is that 10%-25% of your current telecom budget is in question and this can be reduced on an ongoing basis, as well as substantial refunds paid. Teletruth Research & Audits has worked successfully with municipalities to get large refunds and optimize expenses

2) Do you know what fiber optic services should have already been delivered to your community by now? Either it is there -for your use-or it may be owed to you.

In many states, AT&T, Verizon, BellSouth and Qwest have already charged your community and its citizens for fiber optic networks that you never received. That's right, in most states, the phone companies were able to change state laws to get more money to deliver fiber optic broadband. This money came from additional charges on phone bill paid by your constituents, your local businesses, and by your offices as well. What did the phone companies do with those charges, those designated revenues? They pocketed the money --- billions per state all in the form of higher phone charges and excessive tax breaks.

California should have had 5.5 million homes rewired by 2000, Ameritech (Ohio, Illinois, Michigan among others) was to have 6 million homes… In Massachusetts, 330,000 homes should have been upgraded to fiber by 1997 and 100% of New Jersey is to be finished by 2010.

These commitments are based on the phone companies' own data, everything from documents filed with the FCC or the state regulatory commissions as well as made as part of the public record via annual reports, press releases or public statements. We can also prove that in most states, state laws were changed based on these promises and the phone companies were able to raise rates and get tax perks for these networks.

3) Determine Cross Subsidization of Other Phone Company Expenses in Local Rates.

An audit of AT&T California found $1.94 billion of expenses had been added to rates, which included everything from paying for the companies' mergers, lobbying expenses, corporate staffing. We know of no other state to undertake an investigation of such an important question.

4) Phone Company DSL, Long Distance and Wireless: Getting a Free Ride on Your Bills (and Your Constituents, Too)?.

It is clear that expenses from AT&T, Verizon, BellSouth and Qwest's DSL business, the roll out of broadband - including AT&T's Lightspeed and Verizon's FiOS, the long distance business and even the wireless business are being added to local rates -- all getting a free ride on ratepayers.

NASUCA, the National Association of State Utility Consumer Advocates, released a new analysis that corroborated that billions of dollars was overcharged to customers because of this illegal practice. What examinations have been done in your state, and what were the refunds?

5) False Charges: Has Missing Equipment been Added to Your Rates?

Audits of the Bell Companies by the FCC found that 20%-35% of the equipment in the networks are missing and have been added to rates. Your rates are inflated today. In most states, the public service commissions have not investigated or given refunds.

And as far as the 'cost of poles', using the network facilities and other issues pertaining to the phone companies' property, these audits clearly demonstrated that the outside plant, like poles, may not exist. Other data we cross-referenced, the phone companies' tax depreciation of equipment, will reveal that some items, such as poles, may have already been 'written off'. Has your municipality worked to get this money back?

6) Other Added Expenses.

There are many areas of harm to phone company customers. An example --- AT&T and Verizon have been allowed to use of the 411 networks for local and long distance directory, without payments, even though it is a valuable resource and the costs to customers has gone up over 2000% since 1980 for Directory. Or, why has the phone bill insert, or the use of customers' phone records by the directory business been allowed to continue without adequate compensation? There are hundreds of other items to be examined.

7) Broadband Market Realties Analysis

Verizon's FiOS and AT&T's Lightspeed may never get deployed in your muni any time soon. And the state and federal laws may be written to loosen any controls over where or when deployments may occur, and on what terms. A comprehensive analysis of how the plans of the phone companies and other regulations that can impact your communities broadband needs must be understood fully and removing the hype and building a market plan should be a communities first priority.

8) Open the Networks for Use by the Community.

In some states, it can be argued that the phone companies' failure to deliver the networks, even though customers funded these networks, means that whatever is built in the state should have 'common carrier' and 'open' requirements, as well as being ubiquitous, as committed to under state law.

Conclusion:

The following White Paper outlines the areas we just discussed so as to supply your community with a new point of view - ways to get money back from the phone companies. While some of these require communities work together in a state to take an action by the state, other areas, such as forensic phone audits could yield new found cash in a mere matter of months.

Teletruth believes in free, open markets and networks and that communities should be able to control their own destiny. We believe that customers and communities are currently owed money and they should be able to use these funds as they see fit.

Teletruth Research & Audits has put together a team of experts who can help navigate these issues and take the appropriate actions. Read the White Paper. Get mad as you learn how you have been systematically deceived. Then contact us.

Bruce Kushnick, Teletruth
Tom Allibone, Director of Audits