Decades Of Failed Promises From Verizon: It Promises Fiber To Get Tax Breaks... Then Never Delivers
from the this-again? dept
A decade ago, we wrote about how Verizon had made an agreement in Pennsylvania in 1994 that it would wire up the state with fiber optic cables to every home in exchange for tax breaks equalling $2.1 billion. In exchange for such a massive tax break, Verizon promised that all homes and businesses would have access to 45Mbps symmetrical fiber by 2015. By 2004, the deal was that 50% of all homes were supposed to have that. In reality, 0% did, and some people started asking for their money back. That never happened, and it appeared that Verizon learned a valuable lesson: it can flat out lie to governments, promise 100% fiber coverage in exchange for subsidies, then not deliver, and no one will do a damn thing about it.Because here we are about a decade later, and basically the same damn thing has happened in New York City. At least this time, Verizon actually had a fiber service to offer -- the well-known FiOS -- which it "promised" to cover 100% of NYC by 2014. Back when that was announced in 2008, Karl Bode at BroadbandReports correctly warned that you should take that promise with a large grain of salt, both because of Verizon's past failures to live up to promises, as well as the loopholes hidden in the agreement.
It looks like he was right on both accounts. As the account (linked above) at the Verge notes, the language actually is that Verizon just needs to "pass all households," which is interpreted loosely:
There were a lot of caveats in the contract, however. Verizon is only required to "pass all households," a vague term that means the fiber need to extend "to a point from which the building can be connected to the network." Verizon is not obligated to make that connection, however. As a result, the company is now claiming around 75 percent accessibility, even though the number of New Yorkers who can actually sign up for FiOS is probably much lower. A study by public advocate Bill de Blasio concluded that just 51 percent of households in New York have fiber access. The city and Verizon dispute these figures.Verizon is blaming landlords, but as the Verge points out, when someone made a big stink on the radio recently about the lack of FiOS in his apartment, Verizon contacted him the very next day, and had service at his apartment within 3 weeks. The simple fact is that Verizon has been trying its damnest to get out of the wired business altogether. Back when Ivan Seidenberg was in charge, he made a giant bet on fiber, which is why Verizon became such a national leader in broadband with FiOS -- a service that people really seem to love. However, Wall Street has always hated it, because it's capital intensive, and Wall St. recognizes that without any real competition in the broadband space, Verizon can avoid investing in such infrastructure upgrades, and just swim in larger profits while America's broadband infrastructure suffers and falls further and further behind other countries. Once Seidenberg left, the beancounters quickly took over and looked for ways to stop all that investment. Why invest in the future if there are no competitors to push you to do so?
The fact that Verizon had made this big deal with NYC? Well, Verizon knows it doesn't need to care because it doesn't appear that the NYC government cares at all. The most telling part of the article at the Verge is this tidbit:
The city seems satisfied with how Verizon has held up its end of the bargain. When asked whether Verizon had met its contract obligations, the mayor’s office first asked The Verge what Verizon had said, then referred us to DOITT [the Department of Information Technology and Telecommunications], which actually has the contract. DOITT referred us to the mayor’s office. When told that the mayor wasn’t commenting, DOITT suggested we speak with Verizon. When pressed, a spokesperson said, "We just don’t have anything to add here."Nice work, Verizon: you've fleeced yet another place.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: broadband, fiber, nyc, promises, subsidies, tax breaks
Companies: verizon
Reader Comments
Subscribe: RSS
View by: Time | Thread
In light of this failure, what's your solution?
Do you have anything but snark to advise for fixing problems with corporations?
06:00:49[h-1-4]
[ link to this | view in chronology ]
Re: In light of this failure, what's your solution?
Do you?
[ link to this | view in chronology ]
Re: Re: In light of this failure, what's your solution?
[ link to this | view in chronology ]
Re: Re: Re: In light of this failure, what's your solution?
[ link to this | view in chronology ]
Re: In light of this failure, what's your solution?
[ link to this | view in chronology ]
Re: Re: In light of this failure, what's your solution?
The circumvention of regulation due to corrupt former officials who worked to limit the power of regulation while in office are given sinecure roles where they can work to further limit the power of regulation doesn't cause a de facto lack of regulation?
[ link to this | view in chronology ]
Re: Re: In light of this failure, what's your solution?
[ link to this | view in chronology ]
Re: In light of this failure, what's your solution?
Numbnut, this really is not a regulatory issue. It is a government corruption issue. They don't just say we will take a tax break for promising this. Someone had to write and sign a contract somewhere for that to happen.
[ link to this | view in chronology ]
Re: In light of this failure, what's your solution?
[ link to this | view in chronology ]
Re: Re: In light of this failure, what's your solution?
However, in many markets, regulation is the only thing that prevents it form becoming a monopoly.
I think the less vs more way of framing the regulation debate is incorrect because the main problem is that the regulation we have tends to be absolutely terrible.
We shouldn't be arguing about the quantity of regulation, but the quality of it.
[ link to this | view in chronology ]
Re: Re: Re: In light of this failure, what's your solution?
In many markets? Name two.
The reason the regulation we have tends to be absolutely terrible is because consolidated power doesn't fix an over-consolidation of power. Cronyism is the natural result of any centralized oversight where the overseer's continued existence is in no way what-so-ever contingent on their efficacy e.g. government oversight. We are arguing about the quality of regulation: government regulation is of poor quality so we should have less of it.
[ link to this | view in chronology ]
Re: Re: Re: Re: In light of this failure, what's your solution?
Let me revise my statement. In nearly all markets. An unregulated market will inevitably devolve into a monopoly. As Adam Smith pointed out in Wealth of Nations, it's a natural consequence of the free market: eventually, one company will become so powerful that it will simply buy up or bankrupt any new entrants in the marketplace that pose any real risk to their position.
In the long run, it is impossible to have a free market in the absence of regulation.
[ link to this | view in chronology ]
Why?
[ link to this | view in chronology ]
Re: Why?
[ link to this | view in chronology ]
Re: Re: Why?
[ link to this | view in chronology ]
Re: Re: Re: Why?
The discussion was that Verizon is a multi-billion dollar publicly traded company. Why do they need to get billions of dollars of taxpayer money up front, to never actually do what they were supposed to do, as in get FIOS to the taxpayers? If indeed they need to be given taxpayer money to build the infrastructure they are going to own in the end, at least lets make it conditional on actually doing what they were supposed to do, and then give them the money after its done, not before. That is my point and look, I didn't have to use any foul language, sling insults or make things up that weren't part of the conversation or even relevant (except in an NSA kind of way where everything is relevant). Isnt' that amazing?
[ link to this | view in chronology ]
Re: Re: Why?
[ link to this | view in chronology ]
Re: Re: Why?
[ link to this | view in chronology ]
Re: Re: Re: Why?
[ link to this | view in chronology ]
Re: Why?
I think the only way to resolve issues like this is for the people to stand up and demand what they have paid for. refuse to pay for any verizon services and protest outside of the mayors private home.
The best would be if they all had to cancel their contracts en mass and start organising other service provider to come in. It is a free market and even getting 10mb across copper is better than supporting these guys.
Damn i am sure there is someone that could go in and get things set-up for broadband across the copper wires and for everyone to move over and pay for it until verizon moved on and sold the fibre due to nobody taking it up, and then they could control their own fibre network.
[ link to this | view in chronology ]
Re: Why?
Let's say I pay a contractor to remodel my house. Said contractor promptly disappears with my money without doing any of the promised work. Sure it was stupid of me to pay up front, but let's at least blame the contractor for, ya know, Committing FRAUD and STEALING my money.
I just don't see how in these situations people jump to blame the victim, but somehow completely miss the party riping people off.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Response to: jason on Oct 17th, 2013 @ 11:00am
[ link to this | view in chronology ]
Rule #1 to growing the economy, don't listen to Wall Street
-Wall Street tends to like Republicans in the white house more then democrats. Yet the stock market and economy have historically done better when a democrat is in the white house.
-Wall Street largely supported SOPA which would have had serious negative consequences to the economy as a whole, especially the tech and web industry.
-Wall Street usually opposes most new regulations on the environment, even though studies show most of those regulations help the economy, because it stops pollution, less pollution means less people get sick from pollution.
-Wall Street's greed helped engineer the great recession, some of them may have gotten even richer, but the rest of us and the economy as a whole took a massive hit.
[ link to this | view in chronology ]
Re: Rule #1 to growing the economy, don't listen to Wall Street
[ link to this | view in chronology ]
Re: Re: Rule #1 to growing the economy, don't listen to Wall Street
Most of the government backed loans were fine!!!! The loans that went bad were those liar loans that didn't even qualify for fannie mae you fool!
http://www.responsiblelending.org/mortgage-lending/policy-legislation/congress/wall-street-not-fanni e-mae.html
Furthermore it was the LIES that Wall Street institutions told about the underlying worth of this debt that tanked the economy. There was leverage upon leverage.
[ link to this | view in chronology ]
Re: Re: Rule #1 to growing the economy, don't listen to Wall Street
[ link to this | view in chronology ]
[ link to this | view in chronology ]
[ link to this | view in chronology ]
I can't REALLY blame Verizon
The reason is that the housing community - specifically the BUILDER - made a deal with the other big cable company that they would be the only one. So only that company has access to the existing fiber.
I'm sure Verizon WANTS to get in... but they can't without getting agreement from everyone in the community.
So... I'm stuck without FIOS.
[ link to this | view in chronology ]
Re: I can't REALLY blame Verizon
[ link to this | view in chronology ]
I'm not saying Verizon has ever been a company with a heart of gold, but in comparison, Ivan Seidenberg (the previous CEO) was pretty awesome. He worked his way up to CEO from being an entry-level lineman. I think the FiOS program started under him too.
[ link to this | view in chronology ]
Response to: Anonymous Coward on Oct 17th, 2013 @ 2:00pm
Comcast actually sold them a bunch of their dark fiber to help with that.
[ link to this | view in chronology ]
http://pastie.org/8402904
[ link to this | view in chronology ]
[ link to this | view in chronology ]
What should happen next -- hold them accountable
In New Jersey, Verizon was to have 100% of the state completed by 2010 with a fiber optic service capable of 45 Mbps in both directions -- Not Fios but a replacement of the old copper utility wire.
We're starting a new campaign to take them on... and it's time to do this in every state as in almost every state they collected billions of dollars for the upgrades... and it continues as the price of service and even the cell service *(as the cell towers are all connected to a wire) have been able to simply charge customers
To see what we're doing go to http://newnetworks.com/verizonnjbroadbandresources/
[ link to this | view in chronology ]
Re: What should happen next -- hold them accountable
This is uncanny. I was surprised to see you commenting here. since I thought you wrote this gem of an article. You've been pounding the table over these same issues ever since I met you back in the Nineties..
No disrespect toward the actual author intended.
Frank
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re: Verizon didn't exist in 1994.
[ link to this | view in chronology ]
The race to the bottom is neck and neck
Corporate... just another word for blood sucking parasite.
[ link to this | view in chronology ]