Intelligence at the Edge #3

The Trail of Broken Promises

Former consultant uses pen to battle the Baby Bells.

David's smiling face

By David S. Isenberg                                                               amnetlogo

From America's Network, November 1, 1998

Bruce Kushnick doesn't get invited to fancy telecom meetings anymore. When he began exposing the Baby Bells' patterns of broken promises, his status dove from top telemedia consultant to industry pariah.

Kushnick has been over the edge so many times that he's smoothed a groove in it. He was a horrible student in high school, but left Brandeis magna cum laude. He often went homeless, crashing in MIT dorm rooms on nights when their occupants were trysting. Along the way, he took acoustics from Amar Bose, linguistics from Noam Chomsky, artificial intelligence from Marvin Minsky and music from Leonard Bernstein.

In the early 1980s Kushnick's interest in psychoacoustics and computer music led him to the forefront of the emerging interactive voice response (IVR) industry. He designed a system that would let record stores enter sales figures into a centralized database via telephone so record companies could track the effects of airplay on record sales. This was revolutionary stuff in the early '80s, when 300-baud modems cost more than $1,000.

In 1985 Link Resources hired Kushnick for his voice processing expertise. Phone companies and the business community smelled money in IVR, and he quickly became the media's star consultant du jour. His name appeared regularly in The New York Times and The Wall Street Journal. His $5,000 IVR reports sold well and the conferences he organized drew hundreds. He left Link in 1988 to form his own company, Strategic Telemedia, which sold IVR work to all the big telcos.

And then it started

Riding his success, one day Kushnick took a long look at Strategic Telemedia's own telephone bill to figure out where his money was going. "I didn't understand any of the charges," he says. Curiosity piqued, he examined his 87-year-old Aunt Ethel's phone bills and found that over the last 14 years she had paid more than $1,500 in unnecessary phone rental and wire maintenance charges. He tried to get explanations from his clients at the big phone companies, but he couldn't.

Also, his work on ISDN and fiber optic networks was beginning to uncover evidence of deliberate rollout delays, despite public Baby Bell enthusiasm. "I felt that my old clients, the Bells, had deceived me," Kushnick says.

So Kushnick quit, and started New Networks Institute, thinking, "I was going to make a lot of money selling high-end research," he says. But "I discovered that I was biting the hand that had fed me."

Collaborating with Probe Research, a Cedar Knolls, N.J., consulting firm, Kushnick produced a report called Telephone Charges in America, documenting a 275% increase in phone charges in the preceding decade. A second collaboration, Consumer Attitudes Towards Telephone and Cable Companies, a consumer survey that established the fact that people didn't understand their long distance bill, may have led to Sprint's "dime-lady" campaign.

Today, Kushnick is writing a book, The Unauthorized Biography of the Baby Bells (for details, visit In it, he shows a state-by-state pattern of Baby Bell promises in exchange for regulatory relief, followed by broken promises, and increased profits, dividends and stock prices.

The story of Bell Atlantic of New Jersey (BA-NJ) exemplifies the pattern. In 1992, the New Jersey Board of Public Utilities granted BA-NJ freedom from rate regulation "on all services deemed to be competitive in nature" and a freeze on otherwise falling residential POTS rates. In exchange, BA-NJ seems to have promised to spend $1.5 billion "above business as usual" to create a state-of-the-art fiber optic network and broadband services. The program was named Opportunity New Jersey (ONJ).

According to the New Jersey Office of the Ratepayer Advocate, "BA-NJ has utterly failed to fulfill its obligations under the Plan." In a March 21, 1997, document, the agency contrasts the $2.6 billion that BA-NJ claims to have spent on network upgrades from 1993 through 1996 against the $2.4 billion it would have spent in "business as usual" under the old, stricter regulations. In the same period, BA-NJ paid out $477 million in excess dividends. Furthermore, the agency stated, "there appears to be no intention to provide any broadband services over [BA-NJ's] high-speed network."

Kushnick's book documents this pattern of abandoned promises and unfulfilled quid pro quos in every Baby Bell territory. To nobody's surprise, not one big-money telecom interest has stepped forward to support his work. He's deep in personal debt. When I ask about his credit cards, he just laughs. He's betting everything on his book. Once again, Bruce Kushnick's mission has taken him to the edge.

Note: Bell Atlantic representatives were, understandingly, unhappy with the way their performance under Opportunity New Jersey is depicted above. A future Intelligence at the Edge column will delve into their side of the story. - DSI.

Copyright 1998 Advanstar Communications.