Let's see,

First, I have a new book which details the state materials. “The Book of Broken Promises” and goes through 2014, and covers most of the state commitments to deploy fiber optic broadband, monies collected and the failure to deliver and goes through 2014.

http://newnetworks.com/bookofbrokenpromises.htm

This PA, stuff is from 2003, and you got most of this discussion wrong. – Guess you work for the phone company…

>The $2.1 billion is Kushnick's usual fabrication: pick a "rate of return" typical for <regulated monopolies, and call all profits above that number post-deregulation as <"money given to the telephone company."

I didn’t pick the rate of return. Duh- It was based on the current returns that were allowable under state law, and I used the PA numbers—as told by the state-based Bell of PA (now Verizon PA) SEC filings.

The changes in state law happened in every state (though with varying commitments) – such as Verizon states -- PA, NJ, MA, and other states, IL, OH, etc. -- and they were ALL based on direct commitments to rewire parts, if not the entire states as well as schools, depending on the state.

In PA, the original commitment were 100% completed by 2015, (though the commitments were changed over time.) in NJ it is 100% completed by 2010—with fiber 45 Mbps in both directions.

In PA we filed a complaint which said – state laws were changed specifically based on the commitments to upgrade the state utility plant, which was copper, with fiber. It removed the old ‘rate of return’ for new ‘alternative regulation’, that speeded up the write offs of the networks, and no longer examined the profits of a state utility – which had a monopoly on that wire—with the goal to use this extra money for the deployment plan called Opportunity PA.

The profits overall, went from 12%-14%, which was standard in almost every Bell state to about 30% after the new law took effect. In PA it went from 13% then jumped to 30% by 1998. -- But they didn’t deploy the fiber – nor replace the wire. And these numbers were in the SEC-annual reports.

You didn’t bother noting the chart on page 23 outlining the extra profits—directly tied to deploy fiber optics.

And PA and NJ had a timeline of deployment to upgrade to fiber and 45 Mbps—and it didn’t happen. An analyst we quote said:

“As we approach the end of 1998 a point by which BA-PA is supposed to have broadband available throughout 20% of its rural, urban and suburban areas there is no sign of any broadband service being offered to Pennsylvania's residential customers."

And the PA state commission wrote:

“When the Commission accepted Bell's proposal, that proposal became binding on the Company. Any modifications or deviations from a 45 Mbps two way interactive network must be approved by this agency, since such would constitute a modification to the June 28, 1994 Opinion and Order which ruled on the Company's original Petition and Plan.”

You write:
>In other words, the accelerated depreciation was to compensate for the fact that once >regulated prices were gone, the telephone plant would become less valuable. It was not >predicated on replacing that plant with fiber.

Wrong… it was to replace the copper wires in the state utility. You obviously didn’t read the documents. This is the language in the New Jersey Bell (Verizon NJ) annual report, 1994, for a $1.013 billion deduction – for the “company’s technology deployment plan” — It was a one-time deduction which every phone company took, called FAS 71, and it says:

"The Company's determination that it was no longer eligible for continued application of the accounting required by Statement No. 71. It was based on the belief that the convergence of competition, technological change (including the Company's technology deployment plans).

And the result is a tax savings of about ½ billion dollars in NJ —from this one change.

And this is on top of ‘accelerated’ depreciation, which was also set by the state commissions to help speed up the deployment to fiber optics—which didn’t show from 1993-2005. – i.e., the company gets more tax deductions per year and didn’t replace the copper.

We documented this in our first book, 1999, Foreword by Dr. Bob Metcalfe, (co-inventor of Ethernet) who went through all the stats. And it was ALL for the commitment to replace the copper wires with fiber.

By around 2009- in NJ we calculated that Verizon NJ collected about 15 billion.

And you’re apologist for the companies deceiving the public and the state commissions and getting billions extra in tax perks and excess profits – which are monies that directly impact customers’ bottom line.

Law changed – extra money garnered – nothing built, (1993-2005) but to you that’s just fine.

And this PA stuff is from 2002-2003, before we uncovered the entire story about Verizon and AT&T financial manipulations—and it was low number.

Anyone interested in knowing the real history about broadband and fiber should do the fact checking themselves – the new book has detailed footnotes and links.