SMART Letter #13
November 3, 1998




            SMART Letter #13 - November 3, 1998

        For Friends and Enemies of the Stupid Network

             Copyright 1998 by David S. Isenberg -- -- 1-888-isen-com



ANNOUNCEMENT: An Afternoon with George Gilder, December 10, 

4-7 PM, Stevens Institute of Technology, Hoboken NJ.  

For registration info, email



 + Lead essay: Trail of Broken . . . battles the Baby Bells

 + Year 2000 Reflection, and a possible Leading Indicator

 + Conferences on My Calendar, Copyright Notice, Administrivia



Former consultant uses pen to battle the Baby Bells.

By David S. Isenberg 

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 


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 . . .

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 understandably unhappy with 

the way its performance under Opportunity New Jersey is depicted above. 

A future Intelligence at the Edge column will delve into their side of 

the story. - DSI.)

This article appeared in America's Network, 11/1/98.

Copyright 1998 Advanstar Communications.  




  "We are seeing more seizing on stories to support already 

   drawn conclusions: of progress suggesting the problem is solved, 

   or stories of severe effects of interconnectedness, indicating a 

   future of chaos and social disruption. Its important to be as 

   interested in information that disconfirms our bias as supports it. 

   This is a system, friends.  Watch the tendency of emotions to lead 

   perceptions without further questioning. Not a good sign on 

   either side. We need to learn to weigh evidence, not shoot 

   half the messengers."  by Doug Carmichael in Y2K Week #62,

   (to subscribe -- highly recommended! -- contact


   Just a couple of months ago I was at Home Depot looking at

   five different models of gasoline-engine powered generators,

   musing about whether I'd need one for Y2K.  I went to Home

   Depot again last night, and there was one generator in an

   otherwise empty space.  It was a beat-up looking demo model.

   Underneath, where they kept the new "in-the-box" machines,

   was more emptiness -- not a single generator in stock. (David I)



 + November 2-6, 1998, Washington DC: Next Generation

   Networks (NGN98).  Produced by John McQuillan for the

   Business Communications Review crowd.  This is a 

   conference that takes itself very seriously so I will

   leave my fool's hat at home and wear my business suit.

 + An Afternoon with George Gilder, December 10, 4-7 PM, 

   Stevens Institute of Technology, Hoboken NJ. Sponsored by, inc., and the Advanced Telecommunications 

   Institute of Stevens Institute of Technology.  We are

   busting our butts to get the registration process going,

   to get a web page, etc. Tell your friends, customers,

   suppliers, employees, boss, enemies, to get the info by 

   sending email to . . .

 + Solutions 99! -- Denton TX: Sponsored by University of 

   North Texas, Feb 9, 1999. Contact Mitch Land .



Redistribution of this document, or any part of it, is

permitted for non-commercial purposes, provided that

the two lines below are reproduced with it:

Copyright 1998 by David S. Isenberg -- -- 1-888-isen-com


[ to subscribe to the SMART list, please send a brief, 

PERSONAL statement to (put "SMART" in the 

Subject field) saying who you are, what you do, maybe

who you work for, maybe how you see your work connecting

to mine, and why you are interested in joining the 

SMART List. ]

[ to unsubscribe to the SMART List, send a brief 

unsubscribe message to ]

[ for past SMART Letters, see ]



David S. Isenberg


18 South Wickom Drive	888-isen-com (anytime)

Westfield NJ 07090 USA	908-875-0772 (direct line)

				908-654-0772 (home)


     -- Technology Analysis and Strategy --

        Rethinking the value of networks 

      in an era of abundant infrastructure.


Date last modified: 5 Nov 98