Question:

How did the local phone companies collect $400 billion from American consumers for fiber optic internet services that were never delivered? The claim is based on [this article], which cites [this book] as the source, but I cannot find any evidence or explanation of the specific taxes or fees that were allegedly imposed. Is there any reliable and independent verification of this allegation, or is it just a marketing strategy for the book?

Answer:

The $400 billion broadband scandal: Fact or fiction?

You may have seen headlines or posts claiming that Americans paid $400 billion in taxes and surcharges for fiber optic internet that never arrived. The source of this claim is a book by Bruce Kushnick, a telecom analyst and activist, who accuses the local phone companies of pocketing the money and failing to deliver on their promises of universal fiber deployment. But is this claim true, and if so, how did it happen?

According to Kushnick, the story begins in the early 1990s, when the Federal Communications Commission (FCC) granted the phone companies permission to raise their rates in exchange for upgrading their copper networks to fiber optics, which would enable faster and more reliable internet access. Kushnick says that the phone companies lobbied the state regulators to approve their plans, which included specific targets and timelines for fiber deployment, as well as surcharges on customers’ bills to fund the project. Kushnick estimates that by the end of 2014, the phone companies had collected about $400 billion from these surcharges, but had only deployed fiber to a fraction of the households and businesses they had promised.

Kushnick bases his claim on various sources, such as the phone companies’ own press releases, filings, and reports, as well as state laws and regulations that mandated fiber upgrades. He also cites a report by the New Networks Institute, a research group he founded, which analyzed the financial data of the phone companies and concluded that they had overcharged their customers by hundreds of billions of dollars. Kushnick argues that the phone companies used various accounting tricks and loopholes to hide their profits and avoid their obligations, while also benefiting from tax breaks and subsidies. He also claims that the phone companies deliberately slowed down or stopped their fiber deployment, in order to protect their monopoly and prevent competition from cable and wireless providers.

However, not everyone agrees with Kushnick’s claim, or his methodology. Some critics have challenged his calculations, assumptions, and sources, and pointed out flaws and inconsistencies in his arguments. For example, some have argued that Kushnick’s estimate of $400 billion is inflated, because it does not account for inflation, depreciation, or the costs of maintaining and operating the networks. Others have argued that Kushnick’s definition of fiber optic internet is too narrow, and that he ignores the fact that the phone companies have deployed other technologies, such as DSL, FTTN, and 5G, that also provide high-speed internet access. Still others have argued that Kushnick’s claim is based on outdated or inaccurate data, and that he cherry-picks or misrepresents the evidence to support his narrative.

Moreover, some have questioned Kushnick’s credibility and motives, and accused him of being biased and agenda-driven. They have noted that Kushnick has a history of suing the phone companies and the FCC, and that he has a financial interest in promoting his book and his research group. They have also suggested that Kushnick’s claim is part of a broader campaign to discredit the phone companies and to advocate for more regulation and public ownership of the broadband infrastructure.

In conclusion, the claim that Americans paid $400 billion for fiber optic internet that never arrived is a controversial and disputed one, that depends on how one defines, measures, and evaluates the broadband performance and policies of the phone companies. While there may be some truth to the claim that the phone companies have not fulfilled their promises or obligations, and that they have overcharged their customers or misused their funds, the exact amount and extent of these practices are hard to determine and verify. Therefore, it is advisable to be skeptical and critical of both Kushnick’s claim and the phone companies’ counter-claim, and to seek out multiple and independent sources of information and analysis.