Verizon Knows You're A Sucker: Takes Taxpayer Subsidies For Broadband, Doesn't Deliver, Lobbies To Drop Requirements

from the haven't-we-heard-this-story-before? dept

Fri, Apr 25th 2014 5:34am — Mike Masnick

Ten years ago (!?!) we wrote about how Verizon conned Pennsylvania taxpayers out of billions of dollars. Verizon predecessor Bell Atlantic had cut a deal with the state to wire up every home in the state with symmetrical fiber. That didn't happen. And while Verizon's former CEO Ivan Seidenberg did, in fact, make a big bet on fiber with FiOS, Wall Street hated it and kept punishing the company for daring to do something so stupid as investing in the future. This is a quarter-to-quarter world, and spending on capital improvements that would bulk up the entire economy over the long haul is not a bet that Wall Street folks want to make, since it doesn't pay off in a few months. So, it was no surprise that once Seidenberg was out of the picture, it basically dropped all plans to expand FiOS -- and then started looking to push its DSL users to cable providers, so it could focus on the wireless business instead.

A few months ago, we wrote about the same basic story happening in New York City. Verizon made a deal with the city to get all sorts of subsidies and benefits, in exchange for wiring up the entire city with FiOS. That didn't happen. Verizon weasled out of the deal by saying the legalese in the contract didn't actually mean that every home had to get fiber, but just that they had to "pass all households." As in look outside and wave at all that broadbandy goodness passing you by without stopping.

The latest is that Verizon has been able to wiggle out of similar promises in New Jersey. The New Jersey promise was just like the Pennsylvania one, coming back in the early 90s with a promise to wire up the entire state with symmetrical fiber by 2010. Stop me if you've heard this before: that didn't happen. Instead, Verizon flooded the New Jersey Board of Public Utilities with bogus astroturf comments, which it pushed its own employees to send, arguing that the NJBPU should drop that fiber requirement -- and the NJBPU dutifully complied, ridiculously claiming that Verizon's limited, capped, expensive slow wireless LTE service (which comes nowhere near the fiber promises it made) qualifies for meeting the contract terms.

The NJBPU claims that this "settlement," which doesn't appear to involve Verizon paying back any of the rebates, subsidies or fees it received, is a good thing since it will "avoid what could have been years of litigation over enforcement of Verizon's broadband agreement." In other words, Verizon gets to take your money, deliver not very much, and keep it all, because, gee, it would be a real pain to take them to court.

Remember all this as we continue to discuss this new "anti-net neutrality" offering today. Because the telcos have a long history of insisting that if you just give them the regulatory regime they want (which always involves giving them ways to get a lot more money), then they'll deliver the kind of broadband found throughout the rest of the world. Then, they never deliver. Though, they do keep the money.

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Filed Under: broadband, fiber, new jersey, njbpu, promises
Companies: verizon

33 Comments

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Anonymous Coward, 25 Apr 2014 @ 5:43am

If the FCC
wasn't maintaining the Telecom Monopoly, Oligopoly, corruptopoly this would not be much of an issue.

But yea... regulation should only be enough to prevent corporate corruption... not breed it!
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Anonymous Coward, 25 Apr 2014 @ 5:53am

Re: If the FCC
I agree. What we need is a freer market. What we have are bought and paid for anti-competitive laws.
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Anonymous Coward, 25 Apr 2014 @ 5:54am

I know you're against class action lawsuits but this company needs to pay for their greed and lies and theft.
Time for some Citizens v Verizon? Make them pay back every cent taken in subsidies from the states it has screwed.

Also, if you're watching, MPAA, this is what real theft is.
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That Anonymous Coward (profile), 25 Apr 2014 @ 6:00am

Re:
Perhaps just suing the city and asking the obvious question of how much it took for them to pass this.
Betcha there are some nice deals in there.
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Anonymous Coward, 25 Apr 2014 @ 6:10am

I've been pointing this out for months over at Ars and other places - that the telcos have a nasty habit of stealing from the public purse. IT's not just the US, but that is where the most egregious example it.
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Anonymous Coward, 25 Apr 2014 @ 6:36am

I'm so amazed that no lawsuits have been made against verizon , It's like letting a serial killer just walk around free.
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Ninja (profile), 25 Apr 2014 @ 6:39am

Competition is needed. And what's fair is fair. If Verizon and the likes got their tax incentives then any telecom should get theirs. Why isn't Google automatically getting their share in their fiber business?
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Anonymous Coward, 25 Apr 2014 @ 6:40am

funny how a company that really owes millions after taking fees for something it didn't do, wont be prosecuted because it's a pain to do so, but a single person who shares a music album is pounced on from a great height, as hard as possible, is punished to a degree that no sane person could ever imagine and then have the result of the person committing suicide because of what happened, just kicked into touch, like he/she never existed! and governments are complaining about the financial crisis that was caused by these sort of companies, but never suffered one iota themselves and forces those with the least of anything to pay for the debts and heartbreak these industries caused!!
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Anonymous Coward, 25 Apr 2014 @ 6:47am

"This is a quarter-to-quarter world, and spending on capital improvements that would bulk up the entire economy over the long haul is not a bet that Wall Street folks want to make, since it doesn't pay off in a few months."

The problem is, this is how the majority of big business and even smaller businesses work these days, no focus on longevity or long term growth, but instead what pays off now, the quickest, instead of what's best overall. It's a shame since in most cases, focusing on the long term is what keeps companies competitive and relevant.
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Anonymous Coward, 25 Apr 2014 @ 6:53am

Re:
The ides isn't to really make things better for consumers. That would make broadband less profitable. The idea is to grease the palms of politicians. The question one must ask is, when it comes to legislation, what do politicians personally receive in return? Campaign contributions and revolving door favors? Then they'll go for it. The satisfaction that they did something good for their community. They don't care.
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Rocco Maglio (profile), 25 Apr 2014 @ 6:57am

Short Memory
It is terrible that we have such a short memory and attention span. You promise something wait a couple of years and either deny you promised it or try to change what you promised. The press is counted on to combat this sort of thing, but they rarely call politicians and companies out on this.
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Jay (profile), 25 Apr 2014 @ 6:58am

Re:
It depends on who controls the politicians. The digital Game of Thrones demands it.
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Anonymous Coward, 25 Apr 2014 @ 7:03am

Re:
Until we boot the corrupt politicians, we will not recover from this illness.

Most states are happy with their corrupt politician because that corrupt politician gets them things. As long as his corruption faces away from them, or benefits them, they don't care.

This is why congress has such low approval ratings while the quite literal soiled diaper that is congress never gets changed.

The Central Government was NEVER meant to have this amount of power.
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zip, 25 Apr 2014 @ 7:08am

corporate equality
In a way, you could call it fair: if the international banking industry gets to rape the taxpayers, why shouldn't other industries be afforded the same privilege?
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zip, 25 Apr 2014 @ 7:17am

Re: Re:
The root of the problem, as I see it, is that far too few people get involved with local politics. City/county council meetings that are open to the public are generally empty, while many of the issues being discussed are about granting "sweetheart deals" to private developers -- who always insist that nothing will ever get done unless they get a handout.
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Anonymous Coward, 25 Apr 2014 @ 7:46am

Re: corporate equality
What the US needs is a Fairness In Corruption Act. It should be against the law for politicians to discriminate against industries who want to give them bribes, but can't get a seat at the table.
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Anonymous Coward, 25 Apr 2014 @ 7:56am

Re: Re:
idea *
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Anonymous Coward, 25 Apr 2014 @ 7:59am

Re: Re: Re:
These corporate negotiations are generally not done at city/county council meetings. The council meetings are a stage to give the appearance of democracy by allowing the discussion of a limited range of topics. But when it comes to all the backdoor deals those are kept out of publicly open council meetings.
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Geno0wl (profile), 25 Apr 2014 @ 8:08am

Re: Re:
The initial contracts are exactly the type of thing central governments are SUPPOSED to do. AKA efficiently pay to improve infrastructure for their community.
You can't blame the system for inherently doing what it is actually supposed to do.
What you can blame them for is bending over and saying "please sir may I have some more" when said contracts are never held up long term and the population doesn't get what they paid for.
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zip, 25 Apr 2014 @ 8:10am

Re: Re: corporate equality
Maybe that's what MPAA boss Chris Dodd was complaining about when he famously said:

"Don't ask me to write a check for you when you think your job is at risk and then don't pay any attention to me when my job is at stake"

I'm sure that Chris Dodd would favor a "no more laziness" law -- i.e., politicians who accept bribes should be required to put out.
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Geno0wl (profile), 25 Apr 2014 @ 8:10am

Re: Short Memory
What they need to do in 20/20 is set yearly "markers" that the company must hit or their contract is void and they must return all the money.
Unfortunately most politicians don't have the balls or intelligence to set some things up like that.
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Anonymous Coward, 25 Apr 2014 @ 8:26am

Isn't taking tax money without offering anything back in return, taxation without representation? Sounds about right for a plutocracy.
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That One Guy (profile), 25 Apr 2014 @ 8:58am

Re: Re: Short Memory
Getting the money back might be a wee bit difficult, instead, I'd change it so they don't get the whole thing at once, only getting just as much as the construction would take for that quarter, with maybe a 10-25% leeway amount, in case the initial estimate was under.

If they deliver, all's fine, and they get the next quarter's investment amount. If they fail to deliver on the other hand, they are forced to list it as pure profit and be taxed on the amount.

And of course it goes without saying that failure to meet the quarterly goal means they aren't getting any more money. If they want the rest of it, then they have to meet the goal, but on their dime that time.
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John Fenderson (profile), 25 Apr 2014 @ 9:12am

Re:
No, taxation without representation is when the you have no seat at the table where it's decided what is getting taxed, for how much, and why. It has nothing to do with a someone straight-up stealing from the treasury.
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jupiterkansas (profile), 25 Apr 2014 @ 9:54am

Re:
More like paying the serial killer to keep killing.
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Digger, 25 Apr 2014 @ 12:05pm

Good on New Jersey - forcing Verizon to bring TRUE 4G to their fair town...
This will be the first town in the United States, the first Carrier in the United States to actually offer the TRUE 4G standard.

Every carrier, Verizon included has been using a rebranded bastardized 3G and calling it 4G.

Thank you New Jersey for recognizing that Verizon's 4GLTE was anything but 4G, and forcing them to upgrade.

(Yes, I typed this tongue in cheek, but a wise politician or Attorney General would go after Verizon to force them to upgrade their towers and infrastructure to handle TRUE 4G)
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sorrykb (profile), 25 Apr 2014 @ 12:50pm

Re: Re:
At this point, I wouldn't be surprised if Verizon had some language in its contracts requiring the city to cover all costs in the event of a lawsuit.
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sorrykb (profile), 25 Apr 2014 @ 1:08pm

"Settlement"????
New Jersey: Um, hey, Verizon, remember this deal we had, where we gave you everything you wanted and more, and you promised some things. We just noticed you never did those things you promised.

Verizon: Outrageous! How dare you question our commitment to innovation and market freedom?!!!? Look at all these emails from fictional people who love us and Verizon employees who will lose their jobs if they don't say they love us!

New Jersey: Oh, well, guess it's all OK then. Never mind. Sorry to have bothered you.
-----------------------------

Seriously, that's some amazing deal they've got there. You or I break a contract, usually we'd expect some negative consequences. But these guys will probably get even more tax breaks and incentives to guarantee they'll continue to offer crappy and overpriced service to a public that has no viable options.
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Anonymous Coward, 25 Apr 2014 @ 8:02pm

Relevant
http://beta.southparkstudios.com/clips/qblqju/the-cable-company-runaround
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Anonymous Coward, 26 Apr 2014 @ 6:08am

They did this in Washington DC too. I didn't even want FIOS but I have wasted almost a DECADE waiting for competition in the broadband market.
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Pragmatic, 30 Apr 2014 @ 3:14am

Re:
And funnily enough, the "Market will take care of it" brigade are nowhere to be found advocating for private enterprise running of public services in the comments of stories like these.

We really need to break the telcos up and make them compete, Wall St. be damned.
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limbodog (profile), 30 Apr 2014 @ 9:24am

This is what it looks like when legislators stay bought like they're supposed to.
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jacob faulkner, 2 Jan 2016 @ 11:03am

verizon is corrupt
Verizon Fios. I was their # 1 sales agent in the nation 08 and 09. Signed a 36 month contract for a tier commission then after 9 month they lowered the commission! Their accountant Andy Strelic made extra dividends by cutting back commissions. I was responsible for over 80 contractors. aFTER Another 7 months they changed the commissions again lowering them in their favor. I explained to my VZ asm Chris Grey that we would run a strong local door to door crew when hired, page 7 of contract in small writing said "no D2D Sales but because I was making them so much money they said just keep doing what your doing just do not get caught by our in house law team. These words came from Donald Woods mouth atleast 3xs over 2 years. In essence they had me stealing from 1 department with in their own company. Then Mr andy Strelic came around to lower the commissions again and i laughed at him and said no way! he said no choice i said no way unless i get something for my loss! Andy and i worked out a deal to keep me on same commissions for 1 more month. Months later when i went to view the payout for that month i noticed 8700 dollars missing!!! I called them on it and they said Sorry there was a mistake between offices and I will have to take the loss because their mistake! i IMMEDIATELY STARTED MAKING PHONE CALLS TO DON WOODS head of circulation in s california we worked out a deal that they would give me huge coop pay outs 4th quarter "
I said fine because I had "NO CHOICE!!!" Which makes this a human rights violation! If you do not understand how it is a human right violation please email me at jacob at air fiber 1 ... c om.
4th quarter cam around and Chris Grey said they spent 14,000 on adverts "direct mailers never saw 1" but they did send some out because I received 4 calls on them. $14,000= 4 calls. Everybody knows Verizon is lying because that is imposable, maybe they made a mistake again in some department and Andy Strelic the accountant is telling the truth? hahaha "we have a better chance of another sun being born in this life time in our galaxy. While working with this company I experienced nemerous employment violations "We were treated just like employees when we were contractors!
It is hard dealing with major corporations even when helping them because certain people are blinded by dollar signs and they loose all respect for others dignety it is not the 8,000 that Andy stole from me I was making around $ 45-50,000 month working for them at the time! It is the fact that we will destroy another life just for a few thousand dollars that breaks my heart!
I recently lost my father in a car accident we were hit by a 25 y/o female driver who had no in. or registration. Wonder what her story was? , anyways sitting here with a bad back bad neck. I keep my self well sedated. So disapointed in I guess "who we are!" I just figure it out to be 1 big war on the poor "We do not stand a chance because the chips are stacked and the game is rigged I guess just try to do the best and keep moving forward. I have been two 3 third world countries and seen coruption "There just is not enough money to care for all" Here in america I know there is enough money support better dignity of human beings but when will the greed stop? Until they some will go with out.
But if you if you were looking for words of encouragement here they are "It will 1 day stop when the breathing stops".
INTRESTING FACT:
Apparently my mom knew Anderson Cooper back in the 90's She worked at Anderson elementary school on corona del mar. She said he was a nice guy but he got mad at her 1 time because he thought she was on the side of 1 of the other staffers there at Anderson Elementary. She was walking up to warn him that the other lady staffer was looking for him. I appreciate him and his hard work and if he ever wants an interview of this heart breaking story he is more than welcome to it, besides he owes my mom Vivian a small apology. smile emoticon
Also if you are upset about the errors in this post, You probably never experenced such a violation.
Thank you for reading!
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