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What Did the Bush Admin Promise the Telco's in Early 2001?

I have a hypothesis: The Bush administration came to power in December 2000. American telcos were on the precipice about to go into Free fall. We have seen how Bush politicized the Justice Department and are much more aware thanks to John Dean's Broken Government and Charlie Savage's Take Over of the intense desire to aggregate executive power to feed the Addingtons belief in the Unitary Executive.

We now know that Cheney was meeting with the energy industry in early 2001 promising them whatever they wanted. We may begin to ask what the domestic telecoms industry was being promised? Large government contracts for new federal projects. Hundreds of millions of federal dollars in return for a wink and a handshake in opening their facilities to NSA, CIA and FBI surveillance?

I was told by Roxanne Googin in an interview in December 2001 that the fiber swaps that MCI, and Qwest and Global Crossing had been building alleged cash flows on were widely expected to be false "deals" where parties announced optical bandwidth IRUs as income that were nothing more than trades bringing no new income to either party. The first public mention of this fraud occurred in the first week of January 2002. The tech bubble had been unwinding since March of 2000 and by March of 2001 the press was beginning to talk of the dot com crash.

My hypothesis:

It is easy to imagine the bargain: let us snoop on your customer communications and we have huge new contracts for you. But we can do even more. Worried about that pesky internet? No problem. Let us snoop — cooperate and keep your mouth shut and we will take over the FCC on your behalf. We will see that the FCC dismantles the 25 years of regulation that made an independent internet possible. We will bail you out.

Qwest says No and is Punished?

On October 13 in the Washington Post we read: In the court filings disclosed this week, Nacchio suggests that Qwest's refusal to take part in that program led the government to cancel a separate, lucrative contract with the NSA in retribution. He is using the allegation to try to show why his stock sale should not have been considered improper.

Nacchio was convicted for selling shares of Qwest stock in early 2001, just before financial problems caused the company's share price to tumble. He has claimed in court papers that he had been optimistic that Qwest would overcome weak sales because of the expected top-secret contract with the government. Nacchio said he was forbidden to mention the specifics during the trial because of secrecy restrictions, but the judge ruled that the issue was irrelevant to the charges against him.

Nacchio's account, which places the NSA proposal at a meeting on Feb. 27, 2001, suggests that the Bush administration was seeking to enlist telecommunications firms in programs without court oversight before the terrorist attacks on New York and the Pentagon. The Sept. 11 attacks have been cited by the government as the main impetus for its warantless surveillance efforts.

Time to Gut the FCC

Michael Powell, the son of Bush's Secretary of State Collin Powell was installed as Regulator in Chief. While Powell's avowed interest in wireless and spectrum reform served to distract internet defenders his imposition of his ludicrous idea of the virtues of modal competition advanced step by step to destroy the CLEC industry and the independent ISP industry. It seems that, in addition to fat government and military contracts, the telcos were bless with permission to build their duopoly and to reassemble the old ATT through relentless mergers in return for giving the Bush administration ideologues illegal access to our private conversations.

We have seen in detail how in a series of actions between 2001 and 2005 the FCC freed the LECs from the competitive requirements of the 1996 Telecom Reform Act. We are now seeing some additional evidence that the FCC in day to day administrative matters simply decided not to enforce what it was legally required to do. Consider the following:

Over on Cyber Telecom a small ISP wrote last week: "Correct me if I am wrong, but didn't the FCC do away with Enforcement Bureau about the time that Tauzin's and the Triennial Review got passed? Did they really enforce anything anyways?

I called in 2003 to have them (wireline comp or whatever it is now) to try to look to see if the two ILEC's in my area had ever reported their books to them, and they never got back to me. I called back several times and they said they were having trouble finding any information on them. To my understanding on Computer Inquiries III (not exactly sure which one), if a telco is going to have their ISP incorporated into the same company, they had to keep two separate sets of accounting data, one for the telco and one for the ISP, and they had to report this to the FCC every year."

A party who was working at the FCC at the time then observed: "The Enforcement Bureau got bazillions of complaints during the time that I was there, notably including a bunch from the Texas ISP association, but there was no externally visible action on any of them. (One exception: In one instance, a small fine was levied against SBC, if memory serves, for incorrect reporting.)

These investigations are confidential by their nature, so it is impossible to know what was really the deal.

It seems to me that this is a very, very broken process. The party filing a complaint gets no feedback, therefore does not know what it would take to file a complaint that might stick. Since the reasons for a failure to take action are not provided, there is no recourse, no appeals process. And no way to know whether the failure to act reflects a poorly framed complaint, a vindication of the accused, or regulatory capture of the Enforcement Bureau..."

And on October 14 on my private list Scott McCollough observed: "I was the Texas ISP Association's lawyer and the one that submitted most of the complaints about ILEC raping and pillaging. We kept filing and never heard back. Finally one day we went up there after a long effort to get an audience. They orally told us it was a waste of time to complain because they did not intend to enforce the rules. So we quit. Of course none of this ever showed up in any order or filing in any case."

Cook's Edge: This willingness on the part of the FCC is all very interesting. But in light of Joeseph Nacchio's recent assertions it becomes even more interesting.

On October 15 author Glen Greenwald commented on Salon: in a piece called Telecom Amnesty would forever foreclose investigation of vital issues:

"The documents that were released as part of the criminal prosecution of Joseph Nacchio, the former Qwest CEO who refused to participate in what he believed to be illegal government surveillance programs (and was then prosecuted for insider trading by the Bush administration), are revealing in numerous important respects.

Nacchio — who was convicted earlier this year of insider trading for selling his Qwest shares with insider knowledge that the company was about to lose substantial value — is attempting to prove that, at the time he sold his shares, he anticipated that Qwest would receive highly lucrative government contracts (for surveillance and other programs) that were being negotiated almost immediately upon Bush's inauguration in 2001 — months before the 9/11 attacks (the bulk of those projects was ultimately awarded to AT&T, Verizon and others).

To prove that, Nacchio has submitted voluminous (and heavily redacted) documentation (.pdf) detailing the vast number of projects which the Bush administration (and, to a lesser extent, the Clinton administration) was pursuing in joint cooperation with the telecom industry. Those documents were released last week, and there are two critical points that become crystal clear from reviewing them:

(1) The cooperation between the various military/intelligence branches of the Federal Government — particularly the Pentagon and the NSA — and the private telecommunications corporations is extraordinary and endless. They really are, in every respect, virtually indistinguishable. The Federal Government has its hands dug deeply into the entire ostensibly "private" telecommunications infrastructure and, in return, the nation's telecoms are recipients of enormous amounts of revenues by virtue of turning themselves into branches of the Federal Government.

There simply is no separation between these corporations and the military and intelligence agencies of the Federal Government. They meet and plan and agree so frequently, and at such high levels, that they practically form a consortium. Just in Nacchio's limited and redacted disclosures, there are descriptions of numerous pre-9/11 meetings between the largest telecoms and multiple Bush national security officials, including Paul Wolfowitz, Condoleezza Rice, NSA Director Gen. Michael Hayden and counter-terrorism advisor Richard Clarke.

The top telecom officials are devoting substantial amounts of their energy to working on highly classified telecom projects with the Bush administration, including projects to develop whole new joint networks and ensure unfettered governmental access to those networks. Before joining the administration as its Director of National Intelligence, Mike McConnell spearheaded the efforts on behalf of telecoms to massively increase the cooperation between the Federal Government and the telecom industry.

The private/public distinction here has eroded almost completely. There is no governmental oversight or regulation of these companies. Quite the contrary, they work in secret and in tandem — as one consortium — with no oversight at all."

Cook's Edge: Will the gutless, spineless US Congress insult us all by giving expost facto legal blessingto this? Let's hope not!

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VINTON CERF
Co-designer of the TCP/IP Protocols & the Architecture of the Internet

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