OT: Bell Companies Took $21 Billion in Improper Tax Deductions and Overcharged Customers, New Networks Institute Says

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Bell Companies Took $21 Billion in Improper Tax Deductions and Overcharged Customers, New Networks Institute Says

Source: PRNewswire PRESS RELEASE Publication date: Feb 04, 2000

NEW YORK, Feb. 4 /PRNewswire/ -- New Networks Institute (NNI), an independent research firm, filed a formal complaint with the Internal Revenue Service against the Bell companies asking the IRS to investigate claims that the Bell companies took $21 billion dollars of improper tax write-offs between 1993 and 1995. These massive one- time deductions were based on Bell company claims that they were replacing the existing copper network to provide a new "information super-highway" using fiber-optic technology.

Regional Bell Company One-Time Depreciation Write-Offs,


Ameritech $3,785,000,000.00

Bell Atlantic $2,156,000,000.00

BellSouth $2,718,000,000.00

NYNEX $2,919,000,000.00

Pac Bell $3,361,000,000.00

SBC $2,819,000,000.00

US West $3,123,000,000.00

TOTAL $20,881,000,000.00

Sources: New Networks, RBOC Annual Reports, 1993-1996

"The irony of these massive one-time write-offs is that the Bells never fulfilled any of their obligations in virtually any state to rewire America's households, yet took the deductions. This has led to undeserved higher prices for ALL phone services," stated Bruce Kushnick, executive director of New Networks Institute.

"In fact, the copper wiring is still in use. Even ADSL, the Bells' current advanced network, uses this same old copper wiring", added Kushnick.

According to Bell company plans that were approved by various state utility commissions, by the year 2000, more than half of the homes in the United States would have access to the benefits of fiber optic technology. For example, Bell Atlantic stated "We expect Bell Atlantic's enhanced network to serve 8.75 million homes by the end of the year 2000." Meanwhile Pac Bell stated "Using a combination of fiber optics and coaxial cable, Pacific Bell expects to provide broadband services to more than 1.5 million homes by the end of 1996, 5 million homes by the end of the decade." (source Bell Atlantic 1993 Annual Report, Pacific Telesis Annual Report 1994.)

Though some fiber-optic technology has been installed, over 70% of it is "Dark Fiber," i.e., the wiring is not connected or being used.

There are a series of important implications: If the networks were deducted prematurely, then these write- offs were not be allowable, and the monies, including penalties, should be recovered.

If these deductions occurred, then the costs of the networks to ALL customers, from business and residential customers to competitors, should have been reduced dramatically on virtually every service, because network prices are supposed to be based on the actual value of the technology.

NNI estimates that $250 dollars to every residential customer may have been overcharged because the customers paid retail for services that were based on "written-off" networks.

"The situation is compounded by the fact that a recent audit by the FCC of the Bells showed that over $5-19 billion dollars worth of network equipment could not be found. We believe that our claims overlap these findings and just adds more evidence of the Bell's accounting irregularities," added Kushnick.

An earlier, informal complaint was filed with the IRS in May 1998. The current complaint lists each Bell company singularly and collectively.

For more information, please contact Bruce Kushnick at bruce@newnetworks.com. A copy of the complaint, or the original complaint can be found at http://www.newnetworks.com. SOURCE New Networks Institute Publication date: Feb 04, 2000 ) 2000, NewsReal, Inc.



-- Carl Jenkins (Somewherepress@aol.com), February 04, 2000


May have something to do with an announcement I heard earlier today on WGST out of Atlanta that BellSouth is looking to pinkslip approx. 1500 employees. Heard it around lunch local time and have not heard anything else since.

-- idunno (idunno@whoknows.com), February 04, 2000.

Update at the 3:30 pm news on WGST,105.7 FM, Atlanta. 2100 due to get the pink slip from Bell South.

-- idunno (idunno@whoknows.com), February 04, 2000.

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