Audit Reveals Verizon Tried To Corner NYC Broadband Market By Striking Exclusive Landlord Deals

from the you-knew-I-was-a-snake-when-you-picked-me-up dept

As we recently noted, New York City only just woke up to the fact that the lucrative 2008 Verizon franchise deal the city thought would bring fiber broadband to 100% of all five boroughs, has only resulted in Verizon cherry picking about half of the city's residents. Of course as we pointed out, if the city had actually bothered to read the closed-door agreement struck with former Mayor Mike Bloomberg (or listened to a few local reporters at the time), leaders could have noticed at any time that it contains oodles of loopholes allowing Verizon to wiggle over, under and around most of the obligations contained therein.

While most people know by now that taking subsidies and tax breaks for fiber that never gets delivered is Verizon's MO in Pennsylvania and New Jersey (ok, well everywhere), the city only just appears to be realizing the scope of Verizon's shenanigans. In addition to discovering that Verizon failed its build out obligations, analysis of the NYC Department of Information Technology and Telecommunications' audit (pdf) indicates that Verizon also tried to cajole landlords into exclusivity deals that may violate FCC rules:

"[T]wo of the interviewees’ statements supported the first property manager’s statement that Verizon was not completing NSIs because they wanted exclusive agreements for certain buildings before completion of the NSI," according to the audit report. "For example, one property manager from a well-known firm complained that Verizon would not complete the NSI at a building on Sutton Place unless 100 percent of the apartment dwellers committed to Verizon FiOS. This property manager also said only two of the eleven multiple dwelling properties he managed had Verizon FiOS and that installations took anywhere from six months to two years."

So yeah, in addition to pretending that homes "passed" with fiber were "served," Verizon actually refused to wire a lot of properties unless everybody in the building could be forced to only exclusively use Verizon services. This is something the FCC banned in a 2007 order (pdf) that's subsequently been held up during court challenges by cable providers. Verizon has long denied that it does this; in fact the telco has consistently tried to claim that landlords are solely to blame for the company's uneven deployment. This go-round, Verizon is blaming the city's findings on "miscommunication" (when it hasn't tried to dismiss the findings entirely as the unsubstantiated rabble rousing of labor unions).

But that's not all. In the week after the city's audit was made public, a number of competitors have come forward to complain that Verizon's been blocking access to key city infrastructure as well. In other words, Verizon's refusing to serve millions of people, but making it impossible for anyone else to do so either. If you've followed the municipal broadband debate, that's effectively the same logic the mega-ISPs have displayed on a national level, and this kind of behavior by incumbent ISPs (especially if you watched the ILEC/CLEC wars of the late 90s and early aughts) is a major contributor to the nation's utterly mediocre rankings in most broadband metrics.

Having watched telco lawyers get away with this stuff for the better part of fifteen years, it's clear to me few municipal leaders are actually reading the franchise agreements that they sign, and fewer still seem familiar with the laundry list of childhood fables warning them about just these kinds of business transactions.

Filed Under: broadband, competition, exclusive deals, landlords, nyc
Companies: verizon