Verizon, NYC Settle Lawsuit Over Verizon's Empty Fiber Promises

from the day-late-dollar-short dept

Like AT&T, Frontier, and other U.S. telcos, Verizon has a long, rich history of taking tax breaks, regulatory favors, and taxpayer subsidies in exchange for networks it only half deploys. That was the case in the 90s when Verizon took a several billion tax breaks from the state of Pennsylvania in exchange for networks it never deployed. It was also the case in New York City, where Verizon was sued by the city for promising to deploy fiber universally to all five boroughs, and then, well, not doing that.

In 2017, NYC sued Verizon, stating a 2014 deal to deploy fiber to the entire city fell well short of the full goal. As some local reporters had warned at the time (and were promptly ignored), the city's deal with Verizon contained all manner of loopholes allowing Verizon to wiggle over, under and around its obligations. And wiggle Verizon did; a 2015 city report found huge gaps in deployment coverage -- particularly in many of the less affluent, outer city boroughs.

Last week during the holiday bustle the city quietly announced it had settled its lawsuit with Verizon. Under the confidential settlement, the city claims Verizon will expand fiber deployment to an additional 500,000 low income homes across the city:

"This settlement will make sure that Verizon builds out its fiber footprint more equitably throughout New York City — especially in low-income communities that have historically been underserved by internet service providers,” said DoITT Commissioner and Citywide CIO Jessica Tisch. “This agreement attacks that unfair imbalance, and recognizes that high-quality internet is a necessity, not a luxury."

The problem, as usual, will be in the follow up. The original lawsuit (pdf) stated that Verizon had deployed fiber to 2.2 million out of the city's 3.3 million residences with FiOS, despite the original 2008 agreement with the city calling for "100%" FiOS availability. An additional 500,000 deployed homes sounds good, especially during a pandemic, but it's still a far cry from the company's original promise to the city. The city likely found the lawsuit to be too costly or unwinnable, and with so much else going on, agreed to settle and at least get something for its efforts.

Granted this isn't just some one-off problem. Telecom giants are so politically powerful (on both the state and federal level) that genuine accountability for failed promises is extremely hard to come by. One simply needs to look at the long list of cities and states that have accused the company of taking subsidies and tax breaks then failing to evenly deploy fiber, whether it's Philadelphia or a huge swath of New Jersey. And again, you'll find much the same story having played out with telco giants like AT&T and Frontier Communications from Mississippi to West Virginia.

As we've noted for a long time, policymakers act as if U.S. broadband mediocrity is just something that happens or is due to America just being really, really big. In reality, the reason U.S. broadband is patchy, expensive, with atrocious customer service? Plain old state and federal corruption we often refuse to even acknowledge, much less do anything about.

Filed Under: broken promises, digital divide, fiber, fios, internet access, new york city, promises, subsidies
Companies: verizon

New York City Sues Verizon For Fiber Optic Bait And Switch

from the a-sucker-born-every-minute dept

For years now, we've highlighted Verizon's tendency to grab all manner of tax breaks and subsidies from a town or city -- in exchange for fiber optic upgrades that are often never delivered. All up and down the eastern seaboard, Verizon was given the keys to the kingdom in franchise and other agreements filled with loopholes that let the telco, time and time again, promise one thing, then deliver another. And because the company enjoys immense lobbying power over regional regulators and state legislatures, Verizon has never really been held accountable for this behavior.

New York City has been a particular point of contention. In 2008, former mayor Mike Bloomberg and Verizon signed (behind closed doors) a new franchise agreement promising "100% coverage" of FiOS across the city by 2014. As some local reporters had warned at the time (and were promptly ignored), the city's deal with Verizon contained all manner of loopholes allowing Verizon to wiggle over, under and around its obligations. And wiggle Verizon did; a 2015 city report found huge gaps in deployment coverage -- particularly in many of the less affluent, outer city boroughs.

New York City had long promised to sue Verizon over its failures, and this week made good on that promise. A lawsuit filed by the city (pdf) says that Verizon only ultimately reached 2.2 million out of the city's 3.3 million residences with FiOS. The city is seeking a declaration that Verizon is in breach of its deployment obligations, as well as an order to complete the project as promised. The contract required that Verizon "pass" nearby apartments and buildings with fiber. But according to the city, Verizon's definition of "pass" meant "getting the fiber line somewhere close to the building, maybe":

"Verizon's current position, as stated in correspondence and meetings with the City, is that fulfilling the "premises passed" obligation does not, with respect to a given premises, necessarily involve running fiber immediately in front of or behind the premises. Rather, Verizon has asserted, it should be deemed to have'þassed" an individual building if it has run fiber to a nearby intersection and could access the building with further deployment of fiber."

This is pretty much the standard MO for Verizon, and any city surprised by it hasn't been paying attention. In addition to the flaky definition of "passed" (long a fluctuating, morphing determination in telecom for just this purpose), Verizon's agreement contained numerous provisions allowing it to buy or wiggle its way out of deployment obligations if certain television adoption metrics weren't met. All told, countless cities have signed contracts just like this one without really reading them. They then turn around in a few years feeling swindled (like Philadelphia just did).

As such, it's not entirely clear how much luck New York City will have in the courts, but Mayor Bill De Blasio's office has apparently had enough of playing deployment patty cake with the company:

"Verizon must face the consequences for breaking the trust of 8.5 million New Yorkers. Verizon promised that every household in the city would have access to its fiber-optic FiOS service by 2014. It's 2017 and we're done waiting. No corporation - no matter how large or powerful - can break a promise to New Yorkers and get away with it."

The problem is Verizon has "gotten away with it" pretty much constantly -- across a wide swath of its territory -- with zero repercussions, for the better part of a generation. In town after town, state after state, the most "punishment" Verizon tends to see is belated, toothless public hearings that serve little purpose other than to let swindled residents vent. That's because while Verizon's known for building networks, its expertise is really legacy turf protection and lobbying, and those campaign contributions go a very, very long way.

Ideally, cities could avoid all of this by actually reading contracts before they sign them (and making negotiations public and transparent, which didn't happen in New York). On a "positive" note, now that Verizon's busy gobbling up failed 90s internet brands in an apparent quest to pivot to slinging ads at Millennials -- it has largely given up on fixed-line broadband entirely, meaning that its bunk FiOS deployment promises are also taking an extended hiatus.

Filed Under: broadband, broken promises, fiber, fiber optic, fios, new york city, nyc
Companies: verizon

New York City Threatens To Sue Verizon For Failure To Meet Fiber Deployment Promises

from the fool-me-twice dept

We've noted for years now how Verizon's modus operandi is to promise uniform fiber deployment to a city or state in exchange for all manner of subsidies and tax breaks, then walk away giggling to itself with the job only partially complete. This story has played out time and time again thanks to city and state contracts struck behind closed doors without public transparency, allowing Verizon to bury numerous loopholes in the contract language. Other times, Verizon can lobby to weaken oversight so that there's simply nobody left to hold Verizon accountable when it decides to laugh off the contract requirements.

In 2008, New York City Mayor Mike Bloomberg struck a closed-door deal with Verizon delivering all manner of tax breaks and incentives in exchange for what the city thought would be 100% deployment of Verizon's FiOS fiber optic service by 2014. Fast forward to last year, when the new city administration realized that Verizon had absolutely no intention of seriously deploying fiber uniformly across the city. This week, the city released the results of a survey it conducted that found that fiber is unsurprisingly still hard to come by:

"The city recently sampled 52,000 addresses for Fios availability, and found that outer boroughs were more likely to have access than Manhattan. For instance, 90% of Staten Island residents could likely get Fios within seven days, while the same is true for just 19% of people in central Brooklyn and 11% in upper Manhattan. About two-thirds of the more than 300 public-housing developments, which are home to more than 400,000 people, have no access to Fios, the city says.

Meanwhile, a letter from the city to the telco (pdf) complains that Verizon is in violation of at least three parts of the original agreement, failed repeatedly to deliver documentation requested during an audit of Verizon's progress, and cites at least 38,551 addresses where Verizon failed to deliver service despite order requests that are more than a year old.

Verizon, as it is wont to do, tries to spin the narrative on its head by claiming that New York City is being "adversarial":

"It is unfortunate and disappointing that the City is taking an adversarial approach to the only company that has challenged New York City’s cable monopolies,” Mr. McConville said. "The City should be working with Verizon to make choice available to more residents, not discouraging competition.”

Except Cities have every right to be adversarial with a company that has shown repeatedly that it doesn't deliver on its promises. Verizon has tried to claim that grumpy landlords are to blame for its failure to deliver FiOS evenly across the city. And while landlords can play a role in delaying some installations, reporters have subsequently discovered that the excuse just doesn't hold water and Verizon's simply not doing the work.

While it was a contract signed under a previous administration, New York City isn't blameless. Reporters at the time pointed out that the city's contract had ample loopholes and should have been negotiated in the full light of public transparency, but nobody listened. So while New York City says it's mulling a lawsuit against Verizon, that suit may run repeatedly into contract caveats carefully crafted by a company that never had any intention of uniform fiber deployment. The contract reflected this had anybody actually bothered to read it.

The amusing (or annoying) thing is that cities keep making the same deals with the proverbial devil over and over again. Philadelphia recently complained that Verizon failed to meet its obligations there as well. And While Verizon's overall FiOS deployment has been frozen, the city just struck a similar deal with Boston -- with few if any in the press bothering to note the tail of frustration and broken promises trailing miles behind the telco and its lawyers.

Filed Under: fiber, fios, nyc, promises
Companies: verizon

After Ripping Off Cities, States For Years, Verizon Makes Some Familiar Broadband Promises To Boston

from the fool-me-sixteen-times,-shame-on-me dept

We've long discussed how Verizon has a bit of a pattern of getting billions in tax breaks and subsidies in exchange for fiber broadband it only half deploys. State after state, city after city, Verizon gets politicians to sign off on cozy deals that effectively give Verizon everything it wants -- in exchange for promises of "full" city or state fiber broadband deployment. Except time, and time, and time again, cities that signed these sweetheart, loophole filled deals then stand around with a dopey look on their face when they realize they've been had.

Fast forward to this year, when Verizon surprised everybody by announcing that it would finally deliver FiOS to Boston, one of more than a dozen cities Verizon left hanging when it stopped seriously upgrading its fixed-line network -- to apparently focus on gobbling up failed 90s internet empires. The announcement crows that the $300 million dollar deal will absolutely revolutionize the city of Boston's telecom infrastructure:

"Mayor Martin J. Walsh today announced a new partnership with Verizon to make Boston one of the most technologically advanced cities in the country by replacing its copper-based infrastructure with a state-of-the-art fiber-optic network platform across the city. The new network will offer enormous bandwidth and speeds. Through an investment of more than $300 million from Verizon over six years, this change will bring increased competition and choice for broadband and entertainment services in Boston, and support the ongoing efforts to spur innovation and economic opportunity in all neighborhoods."

This announcement was quickly translated by the press as "FiOS is coming to the entire city," though if you look more carefully at the language it becomes clear that Verizon isn't actually promising that:

"This will be a fiber platform across the entire city,” Verizon Wireline Network president Bob Mudge said at an event at the Bolling municipal building in Dudley Square Tuesday. “This is not just about a fiber investment — that’s important, and it’s a fuel. But the fire and the excitement will come from the applications.”

If you study the release it's actually pretty ambiguous as to what Boston gets out of the deal. What's actually happening? Verizon struck a $300 million deal with the city that will deliver a combination of fiber, wireless service, fiber backhaul for wireless towers, and Verizon's internet of things technologies. Much of this is stuff Verizon already planned to spend money on (especially wireless backhaul), and a sizable chunk of it (especially on the IOT front) may or may not actually wind up actually benefiting anybody, as the mindlessly over-hyped IOT is wont to do.

How much actual last mile fiber is left utterly ambiguous. Learning lessons from failures of the past, Verizon isn't getting specific, though speaking on an earnings call this week Verizon made it pretty clear most of these connections will be fifth generation (5G) wireless:

"I think of 5G initially as, in effect, wireless fiber, which is wireless technology that can provide an enhanced broadband experience that could only previously be delivered with physical fiber to the customer," McAdam said. "With wireless fiber, the so-called last mile can be a virtual connection, dramatically changing our cost structure."

And while 5G wireless should be faster with lower latency than existing 4G connections, it's not truly going to be a substitute for traditional fiber. The 5G standard itself hasn't even been agreed upon yet, and most analysts don't believe 5G will see serious deployment any time before 2020. There's also a matter of cost: while Verizon FiOS is uncapped, Verizon Wireless service is capped, metered, and among the most expensive in the country, and 5G will be no exception. It's a $300 million investment, yes, but what it's being invested into isn't really clear.

But good news! Whatever mish-mash of half-promises Verizon is delivering this time may be coming soon to your city, states the telco:

"We will create a single fiber optic platform that is capable of supporting wireless and wireline technologies and multiple products," McAdam said. "In particular, we believe the fiber deployment will create economic growth for Boston and we are talking to other cities about similar partnerships."

Most reporters covering Verizon's plans can't be bothered to note Verizon's long history of not delivering what it promises, or the multiple hearings ongoing in several different states trying to hold Verizon accountable for that fact. Fast forward several years from now, and you'll likely find Boston (and any other cities excited to "partner" with Verizon without reading the fine print) complaining that Verizon delivered only a small fraction of what was actually promised. You'll also find a media incapable of tying all of these narrative threads together.

Still, on a positive note it's great to see Verizon spending anything at all on cities it has been neglecting for the better part of a decade, given this was the same company that claimed net neutrality would kill all telecom investment dead in the water.

Filed Under: boston, broadband, empty promises, fiber, fios, promises
Companies: verizon

Verizon Exec In Charge Of TV Services Admits She Cut The Cord

from the I-don't-really-like-the-product-I-sell dept

When the executive in charge of your company's traditional television services publicly admits she's a cord cutter who no longer watches traditional TV, it might be time to reconsider the future of pay television. By and large most cable and broadcast executives have responded to the cord cutting phenomenon by either denying it exists, claiming it's the domain of losers, or insisting it's a fad that will magically evaporate once more Millennials procreate. But at a recent TV industry conference, Verizon's director of FiOS TV services, admitted she's been a cord cutter for a while:

"Maitreyi Krishnaswamy, director of FiOS TV, has a confession, and it doesn't bode well for the future of Verizon's fixed-line video business. "I've pretty much cut the cord," Krishnaswamy admitted on a panel at the TV of Tomorrow event in New York City. Krishnaswamy is bullish on Verizon's new Go90 mobile video service, but she readily acknowledges there are major challenges in the traditional pay-TV business.

For all its faults, Verizon executives have been considerably more progressive than its industry counterparts when it comes to cord cutting, at times being actually able to admit a massive change is on the wind. And Verizon has responded by being one of the only companies to embrace more flexible TV channel lineups, including its recent launch of a so-called skinny bundle that takes the most expensive part of the cable lineup (sports, ESPN) and places it outside of the core channel offering. Such a move was TV industry heresy, and Verizon was sued by ESPN for its efforts.

That's not to say Verizon's approach to battling cord cutting hasn't been without faults. While Verizon is offering new skinny bundles that are less expensive than the company's traditional cable options, it hasn't been able to entirely shake its legacy telco DNA. As such, the offerings are loaded with the usual sneaky below-the-line fees and device rental charges that jack up the price of the service post sale. Old habits die hard.

As for innovating, like most cable companies, Verizon finds itself torn between wanting to offer a kick-ass, disruptive product, and being terrified of cannibalizing its existing legacy TV customers. The end result for most cable companies is a smattering of services like TV Everywhere that talk a lot about innovation, flexibility and value, but are crafted by people too terrified to actually commit. And while Verizon clearly believes its new Go90 wireless streaming service will make the stodgy telco sexy to Millennials, the service has been maligned as a clumsy smattering of shows Verizon's target demo is already getting elsewhere.

While it's impressive that Verizon recognizes the future and is taking steps toward adaptation, it's important to remember this is the same company currently suing to dismantle net neutrality. And while company execs might be willing to admit they cut the cord, they'll never accept the reality that if history is any indication, it's going to be smaller, hungrier, companies that actually revolutionize the TV sector.

Filed Under: cord cutting, fios, fiostv, maitreyi krishnaswamy, tv
Companies: verizon

Verizon's Screwing New Jersey Even Harder Than Previously Believed

from the regulatory-capture dept

We've previously discussed how in 1993 Verizon conned the state of New Jersey into giving the telco all manner of subsidies and tax breaks in exchange for a promise to wire the majority of the state with symmetrical fiber. Fast forward to 2015, most of New Jersey remains on aging DSL, and the state decided it would be a wonderful idea to simply let Verizon walk away from its obligations. Of course this isn't new: Verizon's regulatory capture allowed it to do the exact same thing in Pennsylvania, and it's currently busy trying to dodge New York City FiOS build out requirements as well.

But apparently, New Jersey is getting screwed harder than state residents even knew. In addition to the sham 1993 agreement, Verizon got New Jersey officials to sign off on a 2006 statewide franchise agreement that also let the company wiggle out of FiOS deployment obligations. Essentially, Newark and Fulop Mayors began noticing that many buildings in their cities were waiving their right to have FiOS installed, something not happening in more affluent areas:

"Mayor Steven Fulop of Jersey City and Mayor Ras Baraka of Newark are expected to call a press conference to discuss whether Verizon is fulfilling its obligations under the act. Public records show that 21,392 different properties in Newark have waived their access rights under the franchise agreement, opting out of any right to FiOS availability. In Jersey City, that number climbed to 25,311, nearly a fifth of the city’s properties. In richer municipalities like Trenton, Weehawken, and Hackensack, that number never climbed above 3,000."

Verizon's 2006 franchise agreement required that the telco make its fiber-based FiOS service available to New Jersey's 70 densest municipalities, including poor areas in Newark and Jersey City that might not otherwise see coverage. But Verizon appears to be abusing a loophole in the franchise agreement that allows it to add buildings to an acceptable "waiver" list of exemptions should Verizon run into trouble during installs. But Verizon appears to be making it intentionally difficult for landlords in poorer cities to successfully contact and schedule installs with Verizon:

"What we understand the practice to be is that, if you're in a wealthy high-rise next to the water in Jersey City, they will bend over backwards trying to get into that building," says Seth Hahn of the Communication Workers of America union, which has supported the mayors in their efforts to get more cable laid. "But if you live on the other end of the tracks, they'll send you a letter saying, 'We'd like access to your building.’" After a labyrinth of phone calls and offerings, the landlord will often end up on a waiver list without realizing it, Hahn says."

None of this is to say landlords can't be difficult. In a 2013 PSC filing with the state of New York (pdf), Verizon claims many landlords refused the telco access to building infrastructure, and some even tried to charge the telco for building access. But looking at the data, it seems somewhat obvious that there's a big discrepancy among waiver totals in poorer cities:Now this could be coincidental, but given Verizon's history on this front, claims that Verizon's using landlords as a bogeyman to justify failure to adhere to obligations seem very likely. You'd need to investigate to be sure, but since New Jersey is already pretty lax on holding Verizon accountable, it's painfully unlikely that the state will ever bother. And letting Verizon get away with this kind of stuff isn't unique; this same story plays out in dozens of states nationwide. Repeatedly.

But the core of this problem is again regulatory capture and these statewide TV franchise agreements. The new laws were pushed by AT&T and Verizon in dozens of states around ten years ago, and were quickly rammed through by campaign-cash soaked state legislatures under the promise of new jobs and lower TV prices thanks to increased competition. But most if not all of the agreements were written by telco lobbyists and lawyers. As such, most of them are basically phone company wishlists, and in some places like Wisconsin, went so far as to gut all consumer protections and even some eminent domain rights.

So yeah, if you didn't realize it already companies like AT&T and Verizon all but own many state legislatures, as evident by the fact they literally write the laws governing their behavior. The end result of that may not be surprising, but the fact that we never seem to learn from decades of this kind of behavior should be.

Filed Under: fiber, fios, fulsop, loopholes, new jersey, newark, poor, waivers
Companies: verizon

Verizon Begs To Be Classified Under Title II For Subsidies; Screams About Parade Of Horribles Any Other Time

from the title-ii-shell-game dept

If you've been paying any attention at all to the whole net neutrality fight, you'd know that the key issue is whether or not broadband services should be reclassified under Title II of the Telecom Act. In the early to mid-2000s, the FCC declared both cable and DSL broadband to be information services under Title I, rather than telecommunications services under Title II. This basically means they are not subject to common carrier rules, including non-discriminatory rules that are the key issue around net neutrality. And, of course, the telcos are putting up a big fight over this, listing out a supposed parade of horribles that would happen if they were reclassified under Title II.

There's just one big problem with this: those very same telcos with those very same networks are begging to have them classified under Title II at other times. Basically, the telcos absolutely love Title II when it gives them all sorts of subsidies and tax breaks.

Here, for example, you can see Verizon making it quite clear that its FiOS fiber service should be classified under Title II in New Jersey. They've done the same elsewhere. Here they are in DC. The reasoning here is simple to understand. For all the talk of why they hate Title II, Verizon (and AT&T) know that Title II gives them tremendous subsidies in the form of access and rights of way. Basically, the only way they can get the right to rip up the ground or access existing conduits and electrical poles to lay all that fiber -- is to be classified as a common carrier under Title II. So a bunch of Verizon's applications concerning its FiOS service are entirely about why they should be classified as Title II.

But here's the little dance move they pull. They claim that this infrastructure must be considered Title II, in order to get those subsidies, tax breaks and rights of way. And they insist that it's proper to classify it as Title II because it offers voice service over those lines. But, at the very same time, they claim that all other services that they provide, must be classified under Title I.

Oh, and it gets better: they claim that in order to pay for all of this (even though they're getting all these breaks and subsidies), they have to raise the prices on telephone service -- which they've done at a fairly astounding rate.

And, we're not done with the scam yet. As we've been describing for years, part of this shell game is that Verizon promises that, under Title II, it will install this fiber to everyone -- and then never delivers. And then, for the final kick in the gut, after it fails to deliver on those promises, it gets local politicians to drop the requirements it agreed to in order to get the subsidies.

And... this doesn't even touch on the issue of "IP transition," where after they get all these tax breaks and subsidies based on the claims of providing (increasingly expensive) "voice" services under Title II, the very same telcos will want to turn off that voice service, in favor of voice service over the internet. Now, voice services are clearly moving to the internet, and that's reasonable. But this is part of the telco shell game. Get all these tax breaks and subsidies by pretending all of that fiber was a Title II service, but then shut down the Title II covered-telco service the first chance they get, and shift it to an "information" service under Title I. Voila: they get all the tax breaks and benefits of Title II for installing the infrastructure, but then don't have to meet the obligations of a common carrier which they promised to meet in order to get those subsidies.

It's almost astoundingly brilliant if we weren't all left paying the (increasingly larger) bill for worse service.

Either way, whenever you see the telcos listing out the parade of horribles under Title II, it might be worth reminding them that they, themselves, were the ones who insisted on classifying their own networks under Title II because of all the "benefits" it brought.

Filed Under: access, broadband, fcc, fiber, fios, net neutrality, rights of way, subsidies, title ii
Companies: verizon