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Municipal Report
Verizon, SBC Chiefs play dumb
by Karl Bode 11:41AM Thursday Mar 17 2005
In a Senate hearing this week on the recent bout of telecom merger-mania, both Verizon and SBC's CEO's deny they're stopping communities from wiring themselves with broadband (CSpan video). "We are not in the business of stopping anybody from doing it," insists Verizon CEO Ivan Seidenberg. "We can’t stop anybody from putting any technology out there," insists SBC chief Ed Whitacre.

The exchange between Senator Kohl (D-Wisconsin) and the two CEO's is entertaining if you've been watching the lengths these companies have gone to out-spin, out-maneuver, outspend, and ban community run broadband efforts in nearly every state in the union.

Kohl: Mr. Seidenberg and Mr. Whitacre, as you know, one important possible alternative for consumers will be wireless connections to the Internet. Using these connections consumers can access alternative phone providers such as VoIP, and avoid the Bell Companies’ connection to their homes.

Cities and municipalities such as Philadelphia have begun to build such wireless networks and plan to offer it to their residents as a municipal service. In your testimony today you’ve spoken at length about the promise of new technologies and how we should not worry about these mergers because the deployment of these technologies will create an abundance of new telecom competition.

Yet at the same time we’ve noticed your companies lobbying state legislatures around the country to stop cities from building these new networks to deploy these very technologies. Pennsylvania recently adopted such a law, and other states considering such laws include Illinois, Texas and Florida. So why have your companies been actively lobbying for such state laws to ban the deployment of municipal wireless?

Will you commit to cease your efforts should your mergers be approved? Mr. Seidenberg, we will give you the opportunity, of course of which you so much desire, to answer first.

Seidenberg: [Laughter] You know, I like to go before Ed, just to make sure I get it in before whatever he says. I don’t know what he’s going to say. Look, we have [stammers] squabbled a little bit with a few municipalities, and let me tell you why. I think, in our case, in the first place, we can’t stop anybody from putting in any technology that they put in.

But generally, we find it unfair that municipalities that regulate us, set our taxes, set our franchise fees, participate in running our company in some fashion also now want to compete with us, under a different set of rules. So every time we see that happening, we point it out.

We would also make the point that in all these places where municipalities want to get into this, with all due respect, they don’t do a very good job either. Which then impacts us because the cities usually come back to us and find a reason that we need to spend money to fix the things that have occurred.

So we are not in the business of stopping anybody from doing it. But where we think the rules are unfair, we’re going to point them out.

Kohl: In Pennsylvania, the law was adopted at the behest of [Verizon]’s lobbying. Is that correct?

Seidenberg: But it didn’t prohibit the municipality from providing the service. It gave us a chance to jawbone about it, but it didn’t prohibit it from doing it.

Kohl: Mr. Whitacre, where do you come from on this?

Whitacre: Mr. Seidenberg answered that as I would. They’re the ones that make the laws, the rules, charge franchise fees, etc. etc., and then to compete against us makes it an unfair competition. From a taxpayer’s standpoint, I don’t really want my tax dollars to be used by a municipality or local government to build something in competition where many other businesses already are. But as Ivan said, we can’t stop anybody from putting any technology out there.

[Long pause.]

Kohl: So do I understand the lobbying of state legislatures around the country to stop cities from building new networks to deploy these new technologies, is not an activity that you all engage in? Or you do engage in that?

Whitacre: [Cuts off Kohl] Oh, we’ve engaged in that.

Kohl: You do engage in that?

Whitacre: You bet. You bet we will. I mean, the basic standpoint again – those municipalities, those governing bodies regulate us and at the same time they are competing with us that makes no sense. So we are certainly going to lobby against that. But can we stop them? No. We can’t. They can put one out there if they wish.

Kohl: [Sarcastically, cutting off Whitacre] Sure, they can do whatever they wish. Mr. Seidenberg, were you clear in your response to that?

Seidenberg: I think so. I’d like to clarify this. But my understanding is that this is not a programmable activity on our part. If we see something egregious we go after it. But this is not something that every single place in the country we have a policy that argues about it. Its only where we think there is a big duplication of effort and its unfair. So yes we do it, but its much more episodic.

So they are "not in the business of stopping anybody" from installing a community run broadband network. Unless your city or town runs into one of the state laws - they've spent millions to lobby for - that bans your town or city from doing so. Clear as mud?

topics flat nest 

Falls Church, VA

2 recommendations

Muni wireless & landline access

So, if one extends the RBOC logic to access...would a competitor want to be forced to buy access from the same company that competes with it for ISP, voice, and data applications? I say bust em up again! Seperate their access business from their other businesses.

Donuts-Is There Anything They Can't Do?
Englewood, CO

Oh, now I see...

Thanks, Ivan and Ed, for clearing that up...

The New Haven Railroad
Buffalo, NY


The CEO's of both Verizon and SBC both deny that their companies are stopping communities from wiring themselves up for broadband.


Belvedere Tiburon, CA

Re: Muni-Broadband

Important clarification: They didn't deny that they were lobbying for muni bans. They only denied that they had that as a blanket policy, saying instead that go after it when they see it.

VoIP--the death knell of remaining voice monopolies!

Smurf in My Loop
Fort Worth, TX

2 recommendations


All this hand-wringing over the "predatory" practices of BB companies is getting to be rather pedantic. Since I have to admit they (the CEOs) have some valid points.

But generally, we find it unfair that municipalities that regulate us, set our taxes, set our franchise fees, participate in running our company in some fashion also now want to compete with us, under a different set of rules.

These munis aren't simply saying, "Come on in the water's fine, we won't change you a penny". When it comes to taxes, fees, etc, politicians are like crack whores, there's no such thing as enough. You know damn well these munis are going to soak these companies for every damn penny they can, which means of course the BB companies are going to pass that right back to the consumer.

I'm surprised they just don't tell the munis "Fine you want to compete with us, then do it on an even basis. Stop charging us all these damn fees, and we'll stop interfering in your BB community plans."

Like I said, all this hand-wringing is getting tiresome. The BB community access furor is getting more and more of the flavor of the attitude of some Americans who think they are owed "something for nothing", or that BB access is some sort of "right". Which is another aspect of modern society, discovering new "rights" all the time.

Someone needs to remind people of Robert A. Heinleins's famous adage TANSTAAFL.


Just because YOU don't pay, does not mean someone, somewhere else is paying.
The idea that complex questions do not have simple answers is a meme propagated by those who have a vested interest, i.e; monetary, power, prestige or ego, in complexity.

Glen Burnie, MD


Neither DSL nor cable internet access is regulated. Only the right of ways and the POTS access.

Lowell, AR

1 recommendation

But I'm already paying for lunch!

That may describe conditions in Fort Worth, qdemn, but out here away from the megopolis things look a little different.

I'm sure in Fort Worth you have a good choice of broadband providers - SBC, Sprint, Earthlink, and your local cable company at least. In that environment I would agree with you. However, out here (and in other areas like Lafayette, LA), Cox charged full rates for 1/4 service until October of last year. While I appreciate the recent upgrades, Cox only upgraded the service after months and months of "hand-wringing", and they started in Lafayette, where Cox and SBC have been battling a muni effort for months. (Go to the Cox forum and search for MAC references for more.)

Why the poor service? No competition. SBC will not activate RTs which have been physically in place and fully connected for months or years. Without the DSL pipe, Sprint, Earthlink, Speakeasy, and a host of others disappear as options. With a captive market, Cox didn't need to spend any money. That's a business decision.

What makes it unfair is that SBC and Cox seem to think they have a right to keep anyone else from stepping in "their territory" by offering service in markets Cox and SBC have deemed unworthy of their service. SBC won't serve? You have to respect their business decision. But don't try to start a muni, because that's unfair to SBC, who won't serve that market in the first place!

I say again to Cox and SBC - Put up or shut up. As for the free lunch, I'm already paying $40/month. I'm just looking for better service, not anything for free. (And I loved "The Moon is a Harsh Mistress, by the way. It's about time to read it again. )

Not bad at all, really.
Airstrip One

1 recommendation


Like any good CEOs Ivan and Ed are quite adept at the 'smoke and mirrors' testimony.

What you and Seidenberg/Whitacre fail to mention is that Verizon/SBC doesn't even provide BB services to some of the areas affected by its outright muni bans. So preemptively usurping a community's right to provide broadband (or any utility) to its citizens--when private companies aren't providing said services--is okay in your book? (This is America right?)

And last time I went to vote, I didn't see either Verizon Inc. or SBC on the ballot. So they don't get to write any laws. Sorry.

Slave To The Duopoly

1 edit

1 recommendation

Ok wait just a minute....

Who regulates the telcos? Not the munis, but the FCC. This a a complete bs argument.

And to take it a step further, the munis are subject to the same federal & state taxes that any other CLEC has to pay.

As to franchises, give me a break. Franchises are the biggest joke of all because the cities are limited to what they can ask for and what they have rights to demand based again on what? The FCC.

Most cable franchises allow the ability to set the price on the base offering - you know, the package that no one takes (just local channels, etc.)


Atlanta, GA

Muni = Predatory Pricing? How do we know?

Is it the coined philosophy of municipal broadband projects to deliver a service or set of services for less while making a profit, or to operate the service(s) as not-for-profit?

Definition: An anti-competitive measure employed by a dominant company to protect market share from new or existing competitors. Predatory pricing involves temporarily pricing a product low enough to end a competitive threat.

If the municipalty decides to offer something tremendously below what the free-market agents can offer similar services at and in turn drives them from themunicipality would this be predatory?

Glen Burnie, MD

Re: Muni = Predatory Pricing? How do we know?

For this to happen, Verizon and others would have to "divulge" what it actually costs them to provide the service. Without this disclosure, there is no basis for the argument that is put forth by the telcos or even the cable companies.

Irving, TX

Re: Muni = Predatory Pricing? How do we know?

Telcos and Cable Companies don't ban any community from operating their own Muni-Broadband System. Stupid citizens and greedy politicians who believe propaganda do. People in this country are so quick to blame everyone but themselves. People keep voting in politicians "just because" they happen to be republican or democrat instead of what they've actually done. All the money these corporations spend only works because people are too lazy to educate themselves, it's alot easier for some to be told what to think. Bellsouth extorting (by removing a Cingular Wireless call center) Lafayette, Louisiana through loss of jobs is not commonplace. Community stupidity is the reason for lack of roll out.

Torrance, CA


"Re: Muni = Predatory Pricing? How do we know?"

this all has to do with competition, nothing more nothing less.....No comp=more money and suck service, more comp=less money and better service....

Chicago, IL


Does this remind anyone of the time when the CEO's of the major tobacco companies sat in front of congress and denied under oath that they knew anything about the ill-effects cigarettes had on the health of nicotine addicts?

In Illinois, we've seen these blocking tactics firsthand. In the Fox River Valley comunity of Batavia last year, SBC mounted a successful FUD campaign to derail that towns plans to develop a municipal broadband system.

They're liars.


Hillside, NJ

Both of them,

ESPECIALLY Ivan, should be thrown in jail and sued by the states and municipalities they provide service to. These guys ARE criminals. Worse than the Mob.

And im told im a jerk for laughing when I hear about a guy running around cutting lines down with a chainsaw.

ForIvan gets what they deserve. They(and all remaining RBOCs) should be divested of their Infrastructure immediately after they roll out FTTx.

Semper Vigilantis
Deltaville, VA

Re: Both of them,

said by TechSponge:

And im told im a jerk for laughing when I hear about a guy running around cutting lines down with a chainsaw.
That don't make no sense at all ... Anyone with a brain understands that a good quality air rifle can do the same job quietly and leave practically no other evidence ...

Just Joking, I love ForIvan.
Problems with Verizon quality of service? Call the FCC. The number is 1-888-225-5322. BE POLITE! Select option #2 and then when you get the next set of menus "Wait for a Specialist".

Saint Louis, MO


Doesnt mean the same as stopping munis from employing. The real complaint ought to go towards the legislatures of these munis. And if the constituents cant handle being bombarded with ads and still make a effort to find out on their own what their voting on they deserve to get what they get.

San Jose, CA


I'm not sure they're playing...dumb

San Francisco, CA

Verizon and SBC playing, yeah, right!

First, I must agree that the Baby Bells must be broken up once again. What was the purpose of break up in the 1980's if they are going to be allowed to create mergers and monopolize the infrastructure once again.

For Verizon and Mr. Seidenberg, stop your whining about municipal taxes, fees, and whatever else you complain about in life. If memory serves me correct, I do not recall you complaining about accepting millions of dollars in tax incentives for building a fiber infrastructure in the states of New Jersey and Pennsylvania. Since the projected dates and percentage of fiber be installed (unless you live in the $$$$ counties of the state of Pennslyvania), they are far behind schedule.

Since that money was from the hard working taxpayers of the state and was basically a free money handout to your company, I do not believe that you or Verizon has any right to complain about municipalities setting up broadband connections in any form. You are certainly dragging you feet even deploying basic dsl to many customers in the state of Pennsylvania.

Since I have only had to deal with SBC on one occasion, I honestly believe that they are extremely anticompetitive in certain areas of the country. After trying to get DSL for someone in the state of California, I was quick to learn that you could not have DSL of any sort unless you are a customer of SBC. If memory serves correct, other Baby Companies do this as well.

Before I hear the arguement of they built the network, they do not have to allow access to any company because they built the network. I find that erroneous. The networks were built many, many years ago. Hasn't all the money collected for their service paid for this network? Aren't they part of being a Public Utility? I must be losing it every time I read anything where either 2 CEO's cry because money would be taken away for their bonus's and stock options.

That is my opinion. I could be wrong.

Palatine, IL

Who Blames the Telco?

If your village hall decided to open a general store and offer cut rates on everything from food and clothing to computers and housewares, I have a sneaky suspicion that BELOVED WALMART and all other stores would pitch a bitch too. Lets keep our access to the internet OUT of the direct control of the government, please.

Fort Lauderdale, FL

Re: Who Blames the Telco?

Oh, u mean like what they do with PXes on military bases here in the states? Oh yeah.. that's a real problem indeed. I absolutely hate bein able to buy the same stuff for much cheaper than I would if I ran down to WalMart

In the case of Municipally run internet access, it's not being shoved down your throat like it is with BS/Verizon/SBC. It's called Freedom of Choice. Oh and also, as a side note, all the cities that would be opening up this municipal broadband, they're all treated and run exactly like a corporation, minus the share-holders. They can be sued just like Verizon could be, they'd be subject to the same "regulations" that the RBOCs have to play with, and best of all... you're not FORCED to use them.

If you want to stay with Comcrap, then by all means, DO IT. Me.. I like the idea of being able to choose, and promote some actual competition, instead of this duopoly crap that's goin on between RBOCs and Cable providers in most areas.

Keene, TX


All you people out there thinking that the big companies are tyring to take adavantage of you I wish would grow up. I run a small wireless BB company and we are right now in the middle of the city USING MY TAX dollars to compete with me. Why should my customers pay for the city service (their tax dollars) and then my service fee? Of course they should not pay twice... the problem is when does anyone remember the last time that a government agancy did anything effecient? For that matter with the exception of the millatary when has the govonment ever done anything better than the priavte sector.

Warwick, RI

Re: MuniBand

said by jrengel:

For that matter with the exception of the millatary when has the govonment ever done anything better than the priavte sector.
Infrastructure: Interstate Highways
Industrial Safety: OSHA
Flying Safety: FAA
Literacy (for those who want): Public Libraries
Retirement w/o pension plan: Social Security

There are a number of federal and state programs that improve people's lives that would never have gotten off the ground if the private sector was solely in charge.

Take a close look at the private sector, and tell me again it's run efficiently. I think the only difference between private and public is how much light shines on each. Both have ways of obscuring the reality.



Okay, how bout this...

Instead of Cities fighting to get muni BB allowed, how about they lobby for legislation that basically give the Cable Co. and Bells an ultimatum. It should state:

"All Broad band providing entities must provide a time table for which areas not yet covered will be upgraded to the full feature set of supported areas. If an ETA cannot be established or an unwillingness to provide service is indicated, then the city/county administration has the full right to deploy its own broad band technology at will."

What about this?