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AT&T, Verizon Decline Connect America Subsidies
As Their Interest in DSL and Rural Markets Disappears Entirely
by Karl Bode Wednesday 25-Jul-2012 tags: dsl · business · telco · Verizon · AT&T
The FCC's Connect America Fund gives phone companies significant subsidies if they agree to expand their broadband services into under-served areas, though hopefullly the FCC can dole out the funds without forgetting to track how the money is spent -- something that has historically been a problem for the agency. Yesterday was the deadline for telcos to sign up for the subsidies, and while companies like Frontier have agreed to take $72 million to wire an additional 92,000 homes, Telecompetitor directs our attention to the fact that AT&T and Verizon have declned participating. Both companies only vaguely stated they wouldn't be participating in the plan because the money wasn't substantial enough and they already have plans for these areas:

Two of those carriers – AT&T and Verizon – yesterday declined all of the funding they had been offered. In a letter to the FCC shared with Telecompetitor, AT&T — which was offered $47.8 million — said it is “optimistic” about its ability to get more broadband into rural areas, “particularly as the technology continues to advance.” But the company said it could not commit to participate in the program until it finalizes that strategy. Verizon, which operates largely in the densely populated Northeast, was offered $19.7 million. The company’s letter to the FCC did not cite a specific reason for the decision, other than noting that the amount of money involved was “relatively small.”

Of course as we've been exploring, Verizon and AT&T don't want subsidies to wire rural markets -- because they are retreating rapidly from wires. Both companies have made it very clear they're willing to watch most of their DSL users flee to cable so they can focus on more profitable LTE. While LTE is expected to cover a lot of rural America, there is expected to be more than a few areas where copper is eliminated but LTE still won't reach -- actually creating more connectivity gaps in 2012 as we try to create fewer.

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ITALIAN926

join:2003-08-16
kudos:1

!

One word: Disgusting

buddahbless

join:2005-03-21
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Re: Disgusting

Agreed... but thats big business.. why take the government handout and service the nation properly for an affordable rate when you can force them all onto LTE for $15 per GB and rape them blind.

This even makes the caped wired service overages from ATT and comcast ( $10 per 50 GB) seem affordable. If those were the rates for wireless LTE ($10 per 50GB not for 1) there would not be as much uproar. heck ATT/Verizon you could even get away with your bogus $20 hotspot fee if the data was priced as above.

cdru
Go Colts
Premium,MVM
join:2003-05-14
Fort Wayne, IN
kudos:7

Re: !

Why is it "disgusting"? Mega-corporations refusing government handouts. Would you rather them accept the money and piss it away with something they are just going to abandon or otherwise not care about? Send the funds over to a telco that would actually use it.

buddahbless

join:2005-03-21
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Re: !

I do see your point and agree they would piss it away, however the mega-corps have made sure that any new telco operation ( Caugh... local municipal broadband) that would step in on there territory are sent the way of the DODO before they even get off the ground.

Its literally a loose-loose for the consumer anyway you look at it.
jcondon8

join:2000-05-27
Fishkill, NY
Reviews:
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Re: !

said by buddahbless:

I do see your point and agree they would piss it away, however the mega-corps have made sure that any new telco operation ( Caugh... local municipal broadband) that would step in on there territory are sent the way of the DODO before they even get off the ground.

Its literally a loose-loose for the consumer anyway you look at it.

I was going to say this. Why do they block the towns from doing their own thing if they aren't interested? Because some day they might get around to offering something there and don't want any competition. Why would I buy their expensive / capped LTE service when my town offers much cheaper fiber?

There are some interesting podcasts about this that I have recently listened to.

»muninetworks.org/tags/tags/broadband-bits
Cobra11M

join:2010-12-23
said by buddahbless:

I do see your point and agree they would piss it away, however the mega-corps have made sure that any new telco operation ( Caugh... local municipal broadband) that would step in on there territory are sent the way of the DODO before they even get off the ground.

Its literally a loose-loose for the consumer anyway you look at it.

Agreed, these companies really think wireless is a replacement and it is for their business but in the end it really isnt.. at the price of 4g with overages people are just gonna stick to sat.. (used it before at a friends house..) lets just say its not so fun, 4g priceing is outragous (I understand that it costs money to operate and profit is needed) but im startin to think for rural areas they should allow increased caps (due to lesser pop..) or at least let the citys that really want their own to make it..

maartena
Elmo
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said by cdru:

Why is it "disgusting"? Mega-corporations refusing government handouts. Would you rather them accept the money and piss it away with something they are just going to abandon or otherwise not care about? Send the funds over to a telco that would actually use it.

This is the issue I have with it.... there are quite a few "community broadband" projects going on. Some want to deploy their own fiber, others want to use the city light poles to deploy wifi, and again others are looking at some other affordable wireless alternative. These efforts are again and again being fought by AT&T and Verizon as they are afraid of competition, in some cases to such a point where they just send 20 lawyers @ $500 an hour, where limited city/community funds just can't fight the behemoth.

If AT&T doesn't want to connect the rural areas, but a local ISP is willing to take it on, they should NOT be allowed to fight it if they refused money to do it themselves.
--
"I reject your reality and substitute my own!"

Cabal
Premium
join:2007-01-21
Austin, TX
Still not a charity.

Simba7
I Void Warranties

join:2003-03-24
Billings, MT

Re: !

said by Cabal:

Still not a charity.

You wouldn't be saying that if your options were dialup or satellite.
openbox9
Premium
join:2004-01-26
japan
kudos:2
Disgusting that they don't want to leach off of the government's teat? You should be thankful that those evil big corporations aren't taking even more taxpayers' money.
ITALIAN926

join:2003-08-16
kudos:1

Re: !

Yes, its disgusting. There are thousands, no, MILIIONS upon millions of people in this country that want FiOS / Uverse access, and they wont even build it with taxpayer money ! Yes, its truly disgusting.
openbox9
Premium
join:2004-01-26
japan
kudos:2

Re: !

Then let another company leach off of the government. I'm still scratching my head why not taking government money is such a bad thing for a business.
ITALIAN926

join:2003-08-16
kudos:1
Reviews:
·Verizon FiOS

Re: !

I'll bet ya that if it was a billion dollars, they would have taken it. This was like Bill Gates walking by a $1 bill, and actually spending the time to pick it up.

Verizon is getting fined way more money by PSC's/ PUC's for inadequate phone service right now.
openbox9
Premium
join:2004-01-26
japan
kudos:2

Re: !

Ok. So the question still remains why are VZ and T being vilified for not taking the money? If indeed the amount of money was too small, we as taxpayers should be thankful that it's not being squandered any more than it already is.

How much if VZ being fined?

garrybussey

@communications.net
Google Fiber should light a fire under their asses.
osravens

join:2011-01-26
Cumberland, MD

Backwards We Go

Maybe it's time to have some sort of "use it or lose it" provision for these companies since their lines are in the public right-of-way.

Spend a certain percentage reinvesting in the lines or lose the right to own them. Don't upgrade the copper to fiber? It's ours now.

swintec
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Re: Backwards We Go

said by osravens:

Spend a certain percentage reinvesting in the lines or lose the right to own them. Don't upgrade the copper to fiber? It's ours now.

Why would "we" want the lines that appear to have no return on investments? If they were worth a damn they would be invested in and upgraded by the phone company. Not sure why you think the government at any level would make them suddenly worthwhile.
--
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osravens

join:2011-01-26
Cumberland, MD

Re: Backwards We Go

Telecommunications service is clearly within the public interest.

If the companies who were granted right-of-way and given in many cases with these rural areas funds to invest in them have no interest in providing a viable service, then we can't just let them milk these people for all they're worth as a digital divide sets up.

The government wouldn't take them to monetize them, the government would take control of them to give these people something worth a damn no private company seems interested in doing.
tanzam75

join:2012-07-19
AT&T might actually be better off if their most-deteriorated lines are taken by the government using eminent domain.

Eminent domain has favorable tax treatment, in that you can reinvest the proceeds in like property without capital gains taxes. Thus, AT&T could spend the money it receives from losing its worst-performing lines on upgrading its better-performing lines to U-verse.

That's not such a bad outcome, considering that AT&T has been unable to find a private buyer for those lines ...
Cobra11M

join:2010-12-23

Re: Backwards We Go

said by tanzam75:

AT&T might actually be better off if their most-deteriorated lines are taken by the government using eminent domain.

Eminent domain has favorable tax treatment, in that you can reinvest the proceeds in like property without capital gains taxes. Thus, AT&T could spend the money it receives from losing its worst-performing lines on upgrading its better-performing lines to U-verse.

That's not such a bad outcome, considering that AT&T has been unable to find a private buyer for those lines ...

interesting you brought that up.., that could be possible.. wouldnt that mean then the government would run it? (I cant see them expanding it..)

TriForce

join:2008-05-27
Chico, CA
Because towns and regional ISPs would deliver meaningful high speed connection at reasonable prices. That can easily happen without the burden of demands for high ROI from big ISPs.

buddahbless

join:2005-03-21
Premium
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Re: Backwards We Go

Agreed. there is one provision that was enacted decades ago by the US government that every residence in the 48 states ( with in reason) should have 2 basic services. 1) telephone line 2) electricity. For 2015 that should be updated to 1)some sort of fiber optic line "as copper is now an outdated standard" 2) electricity.
CXM_Splicer
Looking at the bigger picture
Premium
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We are told quite often that they have no return on investment but that is not true. The reason they don't invest in it is because they get more of an ROI on wireless.

While taking their copper is a little extreme, they certainly shouldn't be allowed to stop community development projects. Jcondo8 is absolutely right, the only reason they sue to block such projects is because it will out-sell their capped 4g. Since they are clearly (and vocally) stating they do not want broadband or FIOS (for Verizon) they should loose the right to claim unfair competition.

skeechan
Ai Otsukaholic
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And who would run it, the gov't which mismanages and bankrupts everything they touch?
sparc

join:2006-05-06
these companies want to to lose these rural lines. Verizon has already offloaded a bunch. AT&T is the one who couldn't find any takers since they started playing the game late.

NormanS
Premium,MVM
join:2001-02-14
San Jose, CA
kudos:9
said by osravens:

Maybe it's time to have some sort of "use it or lose it" provision for these companies since their lines are in the public right-of-way.

Not so everywhere. The utility poles in my old neighborhood are on private property, not public right of ways.
--
Norman
~Oh Lord, why have you come
~To Konnyu, with the Lion and the Drum

VZSUX

@optonline.net

MMM FISHY!!

Why Do i see Frontier and Century Link getting Verizon assests, why?> because VZ is going to be forced to divest Fios and their Landline networks after the Cable Spectrum deal goes though, They'll apply for the funding when they get control of those networks from VZ

Lowell'satool.com

WFA

@ameritech.net

corporate welfare

So now it's a bad thing when companies don't take corporate welfare?

Linklist
Premium
join:2002-03-03
Longport, NJ
kudos:5

Re: corporate welfare

said by WFA :

So now it's a bad thing when companies don't take corporate welfare?

Yes, here in Karl Land, AT&T & Verizon get criticized for not taking an FCC handout as much as for taking it.
--
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David
Now accepting new patients
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Re: corporate welfare

said by Linklist:

Yes, here in Karl Land, AT&T & Verizon get criticized for not taking an FCC handout as much as for taking it.

YOU OWE ME A KEYBOARD! that was hilarious!

mmay149q
Premium
join:2009-03-05
Dallas, TX
kudos:48

Re: corporate welfare

said by David:

said by Linklist:

Yes, here in Karl Land, AT&T & Verizon get criticized for not taking an FCC handout as much as for taking it.

YOU OWE ME A KEYBOARD! that was hilarious!

And you owe me a computer mouse and a free beer!

Matt
--
I am no longer an AT&T Employee. Check out my kudos! »/profile/1626573
Have U-verse questions? Please email uversecare@att.com and they will assist you!!
etaadmin

join:2002-01-17
Dallas, TX
kudos:1
said by WFA :

So now it's a bad thing when companies don't take corporate welfare?

It was a bad thing when they took the welfare and still is a bad thing... specially when corporations pocketed the money instead of spending it the way it was intended.

As soon as their corporate puppet gets elected they'll go back to their old ways.

David
Now accepting new patients
Premium,VIP
join:2002-05-30
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kudos:78

.

well anyone that wants to be their own ISP should pipe up now and apply. There should be no excuses now.

buddahbless

join:2005-03-21
Premium

Re: .

Im pretty sure there would be a lot of municipalities that would if big business hadn't already bribe the government to make sure that does not happen...

Double wammie... Make sure they cant build it, and make sure we don't have too!

Simba7
I Void Warranties

join:2003-03-24
Billings, MT
I'd love to. I'd go the wireless route, but not LTE.

Time to dig through Ubiquiti's website.

mmay149q
Premium
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Dallas, TX
kudos:48
said by David:

well anyone that wants to be their own ISP should pipe up now and apply. There should be no excuses now.

How would one go about doing this? I'd be more than willing to spearhead this project

Matt
--
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txpatriot

@or.us

Re: .

said by mmay149q:

said by David:

well anyone that wants to be their own ISP should pipe up now and apply. There should be no excuses now.

How would one go about doing this? I'd be more than willing to spearhead this project

I'm sure the nice people at google in Kansas City would happy to tell you how they did it, and all w/o government assistance. Hopefully that doesn't make them bad guys too . . .
axus

join:2001-06-18
Washington, DC

LTE will probably be pretty good...

I expect LTE will be a nice improvement. If you had to choose between Frontier and LTE in a rural area, which works better? Really, all the nice expectations we had for WiMax should apply to LTE also.

Really, what LTE needs is more wireless competitors. I expect that putting up a tower is a lot easier than wiring up a bunch of houses. AT&T and Verizon duopoly will stagnate by itself. That open 1GHz band from the white house advisers sounds like the ticket.

w0g
o.O

join:2001-08-30
Springfield, OR

Re: LTE will probably be pretty good...

No one will want to use lte in its current form on anything other than their phones. its too damn expensive at $10-$15 per gigabyte, and you will tear through your plans cap in a matter of seconds if you try to utilize it. they also charge even more for computers to be connected, and the most you will be doing is checking email or facebook, and avoiding all video ans heavy media like the plague. if you tried to do what you did on cable or DSL with lte, the bill would run $350-$500 per month, for 30GB of transfer, which is on the low side as far as cable and wired broadband usage runs. comcast says that's what typical users consume when averaged out.
--
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TriForce

join:2008-05-27
Chico, CA
Not a chance. Caps, caps, and more caps.
Cobra11M

join:2010-12-23
said by axus:

I expect LTE will be a nice improvement. If you had to choose between Frontier and LTE in a rural area, which works better? Really, all the nice expectations we had for WiMax should apply to LTE also.

Really, what LTE needs is more wireless competitors. I expect that putting up a tower is a lot easier than wiring up a bunch of houses. AT&T and Verizon duopoly will stagnate by itself. That open 1GHz band from the white house advisers sounds like the ticket.

it doesn't matter!!, sure LTE is faster! for rural.. but your missing the price range.. CAPS and overages.. alot of people dont want to see a bill for 500-1000 or more just for internet!, people wont flee to LTE they will stay with Sat or dsl.. LTE is a cash grab, Your speeds are way higher sure.. but you will blow threw your 4gb in less than hours at that speed

w0g
o.O

join:2001-08-30
Springfield, OR

Re: LTE will probably be pretty good...

yeah, let's say your connect rate is subpar or the tower is being over utilized, at 8Mbps, on the low end of lte speed, you'd do 3GB in 52 minutes. lte at the typical 16Mbps, then you're looking at 26 minutes. 32Mbps or higher, which is possible, 13 minutes or less. imagine doing a full windows update and chewing through half or your entire cap, on nothing but the essensial background tasks you system performs. its designed so that you can't use the service for anything and you pay an arm and a leg.
--
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maartena
Elmo
Premium
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Orange, CA
kudos:1
said by axus:

I expect LTE will be a nice improvement.

If LTE comes with a 50 Gb cap, it will work. Realistically, it is very easy to clog up an LTE system with huge downloads, so some form of cap is needed. But... it should be a hell of a lot more then the palsy 5 Gb people get now (for a premium price) and there should not be a financial penalty. If you reach 50 Gb, you will simply get throttled to say.... 256 Kbps or something along those lines, so you can at least work and do some basic internet stuff.
--
"I reject your reality and substitute my own!"

w0g
o.O

join:2001-08-30
Springfield, OR

waste of money

the FCC is paying to expand non-broadband options like DSL? waste of money entirely, any investment should be going toward fiber. DSL is so far behind except for the few close to the RT or CO, so in effect they're paying to deploy 1.5Mbps or less to people. cable and fios meanwhile are pushing 20Mbps as the standard, upto 300Mbps. should at least put that money towards something useful and non archaic. so tired of paying to maintainand build DSL and unshielded copper lines that serve little purpose outside of telephone service anymore.
--
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tmc8080

join:2004-04-24
Brooklyn, NY
Reviews:
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block grants..

apparently, these are 70 - 100 million $ block grants which are tied to deploying a next generation network (or at least one grade higher than what's currently there) to rural and under-served populations... and based on the specific requirements and the number of customers to be connected.. the big telcos are saying NO THANKS.. they'll just gouge the customers they have more to make up the 100 mil. difference.

so, why not give the grant to RCN, they can wire the rest of Boston, and spread out in Massachusetts.., or Queens, NY, etc..

Apparently the government thinks telecom companies can connect 350 - 400k people with just $70 - $100 million dollars...
really? Hmm...

Here's an idea.. give the 100 mil. to Google and expand that Kansas, Mo fiber out to the poorer suburbs outside KC!!!

skeechan
Ai Otsukaholic
Premium
join:2012-01-26
AA169|170
kudos:2

Cool

So give the taxpayers their money back!

Simba7
I Void Warranties

join:2003-03-24
Billings, MT

Re: Cool

said by skeechan:

So give the taxpayers their money back!

HA! Like that'll happen. Hell would freeze over first.
elray

join:2000-12-16
Santa Monica, CA

Reality, again!

The carriers are refusing the subsidy, because they know they'll still lose money.

Verizon can't get more than 1/3rd of their customers to buy Fios; Rural customers are more fickle - simply not interested in buying broadband at even urban market rates.

buddahbless

join:2005-03-21
Premium
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Re: Reality, again!

Rural customers are not more fickle just more cautious on how they spend there cash.. If you gave rural customers the option of comcast at $40 per month for 3-6 mbps HSI @ or ATT DSL 1.5-3.0 mbps for $15 they would chose the ATT DSL and be happy with it, with not even a care in the world that there are pricier options for 20-100 mbps. A lot of people seem to forget there only option in rural areas is dial up for $9.95 + per month. Why would anyone pay $10 for 56k dial up if for just a few bucks more they could get at least DSL speeds.

Really what would you chose if you at least had the option but were on a budget.
elray

join:2000-12-16
Santa Monica, CA

Re: Reality, again!

said by buddahbless:

Rural customers are not more fickle just more cautious on how they spend there cash.. If you gave rural customers the option of comcast at $40 per month for 3-6 mbps HSI @ or ATT DSL 1.5-3.0 mbps for $15 they would chose the ATT DSL and be happy with it, with not even a care in the world that there are pricier options for 20-100 mbps. A lot of people seem to forget there only option in rural areas is dial up for $9.95 + per month. Why would anyone pay $10 for 56k dial up if for just a few bucks more they could get at least DSL speeds.

Really what would you chose if you at least had the option but were on a budget.

Fickle, cautious, frugal, conservative - you can call it what you like, the fact is simple, rural customers are less willing to part with their hard-earned dollars for broadband, at any speed.

Urban DSL isn't $15. You have to buy dialtone, which takes even a $15 teaser rate to about $40, typically $50-60. Basic DSL rates run $25-40 before fees.

OSUGoose

join:2007-12-27
Columbus, OH
Reviews:
·Insight Communic..

Hey

Not to defend AT&T here, but the optomist in me thinks that maybe AT&T is trying to develop a plan to deal with their rual subs (that does not mean selling them off). They may be trying to get the metro areas upgraded 100% to u-verse system, and taking the old stuff out to the rual areas. And such dident want to be restricted to a timeline of doing this.

I know the odds of that being true are very razor slim, but shoot I can dream.
Cobra11M

join:2010-12-23

Re: Hey

said by OSUGoose:

Not to defend AT&T here, but the optomist in me thinks that maybe AT&T is trying to develop a plan to deal with their rual subs (that does not mean selling them off). They may be trying to get the metro areas upgraded 100% to u-verse system, and taking the old stuff out to the rual areas. And such dident want to be restricted to a timeline of doing this.

I know the odds of that being true are very razor slim, but shoot I can dream.

to put fiber in rural areas (which is needed for u-verse) is not something that AT&T would do at all.. they answer to the stock holders and if they did their stocks would fall.. AT&T wouldn't even consider this as a option for profitability.. their serious about selling or just letting it rot. Its nice to dream but that's a fantasy that will never be fulfilled unless of course if fiber becomes almost as cheap as phone lines haha

OSUGoose

join:2007-12-27
Columbus, OH

Re: Hey

I never said AT&T would deploy fiber for u-verse in rual areas.

I stated that perhaps the ADSL equiptment they are decomissioning in u-verse metro areas, would then get moved to the rual areas for DSL service.

Hank
Searching for a new Frontier
Premium
join:2002-05-21
Burlington, WV
kudos:1
said by OSUGoose:

Not to defend AT&T here, but the optomist in me thinks that maybe AT&T is trying to develop a plan to deal with their rual subs (that does not mean selling them off). They may be trying to get the metro areas upgraded 100% to u-verse system, and taking the old stuff out to the rual areas. And such dident want to be restricted to a timeline of doing this.

I know the odds of that being true are very razor slim, but shoot I can dream.

That may be, but do you really know of rural areas that actually have a choice in carriers?
Cobra11M

join:2010-12-23

sadly

I think the only thing that will help rural areas in the long run is if the goverment is willing to use some of the whitespace for start up companies.., AND NOT TO AT&T AND VERIZON.. the companies want that more than anything and we all know this, If the whitespace was used for other providers to come in I think we would see wireless change big time but then again it would be costly

Jon Geb
Wal-Mart Sucks

join:2001-01-09
Howell, MI

Can you really blame them?

Why on earth would you continue to invest in a dead end technology, wired communication and entertainment is dying. The only need for wired infrastructure is for backhaul to towers.

See 11 replies to this post
rody_44
Premium
join:2004-02-20
Quakertown, PA
Reviews:
·Comcast

Oversight

Along with accepting money in this program comes weekly visits to the job site by the federal government. Verizon cant afford to let that happen for any amount of money. Not with the amount of illegal mexicans they have doing the work. No rule against them from using it for fiber. But the rules do have a huge amount of monitoring done by the fed. It actually calls for weekly inspections and Obama created a agency for just that purpose.

JakCrow

join:2001-12-06
Palo Alto, CA

Where's that anti-trust?

Why are these companies being allowed to continue in this way? What the hell!
chuckkk

join:2001-11-10
Warner Robins, GA

Declined Connect America Subsidies

Perhaps there were "strings" attached?

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