In his keynote address at ISPCON spring 2003 in Baltimore, telecom reformer Bruce Kushnick delivered a strident call to arms for small independent ISPs.

by Ted Stevenson ISP-Planet Executive Editor [May 8, 2003]

Speaking to a plenary session at ISPCON Spring 2003 (Baltimore, Md., April 23-25), Kushnick, Chairman of the watchdog organization TeleTruth told listeners, "When I was invited to speak here, I felt a little as if I'd been asked to rearrange the chairs on the deck of the Titanic, so the violinists could play while the lifeboats were being lowered." Translation: You guys are in big trouble and you need to do something—now.

The central contention of Kushnick's address was that ISPs—especially small, independent ISPs—are rapidly being shut out of the broadband future—by the Federal Communications Commission (FCC), by the U.S. Congress, and by the Regional Bell Operating Companies (RBOCs or "Bells"), and that rule changes being promulgated by the FCC are almost certain to push service providers into extinction. But though late in the game, it is not necessarily too late to change the outcome, Kushnick feels.

The speech outlined a multi-pronged program designed to influence the FCC rule-change decisions currently in progress, which included supporting a suit by the Small Business Administration's Advocacy Office against FCC enforcement practices, a TeleTruth petition asking the Securities and Exchange Commission to investigate the FCC's handling of audits of the Bells, and, most importantly, vocal activism in the form of a campaign to educate Congress about the fact that ISPs have a vital role to play in our national prosperity.

"Congress—and the FCC—needs to know that ISPs have a reason to exist," Kushnick asserted. "They provide services the Bells don't—and never will."

"Furthermore, you've got rights that have never been enforced," Kushnick told the assembled ISPs. "The FCC is required, under the Regulatory Flexibility Act (or RFA, passed by Congress in 1980) to do impact studies on how its rulings will affect small businesses. (Small is defined as 1,500 employees or less.) It is also required to proactively solicit input and testimony from the community affected. In its recent Triennial Review NRPM (see the releases here in MS Word format: [news release] [explanatory attachment]), it consistently failed to do these things," Kushnick said.

Apparently the SBA agrees: In February of this year, its Office of Advocacy filed an Ex Parte Presentation with the FCC, urging it to comply with the RFA by fully evaluating the impact of its rulemaking on small businesses, and suggesting several ways in which its proceedings might be altered to bring about that result. (Read full details here.)

A similar intervention was filed by the National Federation of Independent Business (NFIB), urging enforcement of the RFA in accurately gauging the impact of the Commissions proposed rule changes on America's small businesses. Central to the threatening situation for ISPs, Kushnick pointed out, was the FCC's proposed rule changes regarding line-sharing and carriers' obligations to lease their networks to competitors.

You get the government you buy
"For over a decade, the Bells have promised to build 'the information superhighway'—fiber to the home (FTTH)—as a justification for huge rate-hike concessions by the FCC," Kushnick said. "This is the year 2003, and not one commitment for fiber optics to the home was ever fulfilled—in any state," he continued. "Meanwhile, they have pocketed more than $70 billion of their customers' money that was supposed to pay for these 'networks of the future.' "

Kushnick cited the specific example of Pennsylvania, where Verizon PA promised to have installed 45 Mbps bi-directional fiber to the home—in rural, suburban, and urban areas covering at least 50 percent of the state—by 2004. "We estimate that Verizon collected about $785 per household in rate increases—a total of about $2.1 billion dollars—over this period, and not one fiber to the home link is in place," he said. "However, the state of Pennsylvania plans to hold the Bell accountable."

Find the switch, or find the bait and switch
Shifting to another explosive telecom issue, Kushnick described a scandal that developed in an FCC/carrier deal back in 2000 but emerged into the public eye only recently (as shown in this Forbes article, free registration required). It seems that the rate increases granted to the Bells and a couple of very large long-distance providers back in 2000 (in a program with the benign moniker of Coalition for Affordable Local and Long Distance Service or "CALLS") were based not only on promises to build broadband superhighways, but also on the telecom providers' "rate bases."

A routine audit run by the FCC's audit division revealed, however, that somewhere between $5 and $10 billion of the carriers' assets were lost, stolen, or strayed. More precisely, telco assets to this amount were not found, found to be over reported, or impossible to verify.

The FCC's response to this disclosure, Kushnick reported, was to call off the audit. "They went farther than that," he reported. "They shut down the entire audit department, so the case couldn't be reopened. It's another example of customers being shortchanged by billions of dollars."

TeleTruth has subsequently submitted a petition to the Security and Exchange Commission to investigate the FCC's actions in this matter.

Getting involved
So is there anything that ISPs can do to end abuses of the regulatory system—and keep their businesses from succumbing to pending FCC rulings? Kushnick thinks there is.

"Talk to Congress. Talk to the FCC. What's more, get your customers to talk to these bodies. Be proactive. Be persistent. Make them understand what the value of independent ISPs and CLECs is—how the American economy and American society will be damaged and what the monetary and other costs will be if competition in telecommunications is strangled," pleaded Kushnick in closing. "If we don't all act, and act quickly, there may not be an ISPCON a year from now."

— End