[rayiner]

Unsurprisingly, it's Bruce Kushnick making the allegations referenced in the article. Read the Word document referenced here: http://www.teletruth.org/docs/PENNCOMPLAINTFIN.doc.

Where does the $2 billion come from? It starts on page 4 of the document.

> Customers paid for a network they will never receive. We estimate that the Company received $2.1 billion from this deregulation, including an additional $1.5 billion in extra tax deductions the Company received from excessive write-offs of the still existing networks.

He gets into the real numbers starting on page 23.

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."

Page 28+ gets into the tax angle. The basic premise of his argument is that Bell Atlantic took an unjustified accelerated depreciation on its copper phone network. He paints this as a scam: they took the write-off on the basis that they were going to replace it all with fiber, then failed to do so.

However, that wasn't actually the accounting justification for taking the write-offs.

> In such markets, the Company does not believe it can be assured that prices can be maintained at levels that will recover the net carrying amount of existing telephone plant and equipment, which has been depreciated over relatively long regulator-prescribed lives.

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.

At best we're talking about Bell Atlantic taking depreciation deductions faster than they should have. It's certainly not equivalent to Pennsylvania writing it a $2 billion check for fiber that was never delivered, or even giving them $2 billion in tax deductions for fiber that was never delivered. Maybe this accelerated depreciation was not proper. I'm not a tax expert. But neither is Bruce Kushnik.

[shakethemonkey]

Perhaps that's not the best source to link to.

But Bell Atlantic never did live up to promises it made in 1994 to build a fiber broadband network in exchange for permission to raise its rates.

http://articles.philly.com/1994-07-16/business/25844080_1_be...

Is the amount of money they garnered from keeping/raising their rates on the order of $2B? (My guess is that it's a larger number than that)

[tptacek]

Are you conceding at this point that Verizon did not take billions of dollars in taxpayer money for a fiber network they didn't build?

[shakethemonkey]

In this one particular case, yes. But not that they did not receive indirect remuneration (rate concessions) in exchange for unfulfilled broadband promises, possibly far exceeding $2B. I'm not sure why my comment was downvoted, as the article in the Inquirer shows that such promises were indeed made by Bell Atlantic.