C.  Vaporware Scandal

 

The most important news of recent is the "Vaporware" that now has come back to bite Verizon in the rear.

 

Before Bell Atlantic and GTE merged, the Bells were audited by the FCC.  After only performing 25% of the audits, the FCC found that there was nearly $20 billion worth of equipment missing that was being used as write offs...a potential $80 billion dollars in total.  Why is this so important?  Phone rates are set based on the phone company's profits.  Therefore, when a company can illegally write off billions of dollars, they can raise rates even when it's not warranted.  Exactly what Verizon and the other Bells have been doing since that time.

 

Based on the magnitude of the numbers, this makes Enron and WorldCom look like small potatoes.  Needless to say the Bells pulled out all the stops to try and find a way out.  Their plan was to argue that the audits were not performed properly, and they managed to use their biggest constituent, Billy Tauzin (R-LA), to argue the point. 

 

Faced with a great deal of political pressure, the FCC decided not to pursue the audits, and then turned them over to the individual states.  The state of New York was the only state to do a follow-up, and sure enough, over $633 million dollars of equipment was missing in that state alone.  Unfortunately, nothing was ever done about this issue after those audits...until now.

 

Verizon thought they had made a clean "get away", however  Verizonpathetic and the consumer alliance Teletruth have filed a complaint in three states with the Department of Telecommunications and Energy as well as with the attorney general's office in each state.  Already there is a buzz with the press that is causing for many to seek a full investigation.

 

 

D.  SBA Joins the Battle

 

Verizon would like nothing better than to cut off the ISPs who have helped to grow the internet, however, VZ argues that they do not agree with sharing their networks.  Putting those businesses out of business is their current plan of action.  The FCC appears to have a very cozy relationship with the Bell companies and is offering support for this manuver as well.

 

Fortunately, the government agency known as the Small Business Administration (SBA) has chimed in to let the FCC know what a ridiculous mistake this is.  As a result, a number of ISPs are feeling confident enough to join the battle against Verizon and other Bell monopolies for their survival.  It is not often that one government agency is willing to go toe-to-toe with another, however the FCC has demonstrated it's overwhelming bias towards the Bells and is now being called on it.