New Report Raises Questions About Verizon Phone and Internet Services: “It’s All Interconnected”

A New York Utility Project report raises questions regarding the regulatory oversight of Verizon New York, the largest telephone company in New York State, and its affiliates. The report was triggered by troubling developments in an era when not only basic phone services but also advanced telecommunications increasingly are needed by consumers to participate in normal community activities, work, education and business development.

After nearly two decades of lighter PSC regulation, New York now has one of the nation’s lowest rates of household telephone penetration, high prices,  and low service quality.  Verizon New York has halted the expansion of fiber internet services to new areas within its service territories, and has attempted to abandon wireline service and replace it with an inferior wireless service, in areas where it deems repair of copper lines not to be profitable, raising the possibility that many New Yorkers will receive lower quality, high cost telecom service in the future.

Much of the rationale for lighter regulation was based on optimism that robust competition might emerge and so make regulation of rates terms and conditions of telecom services less necessary. Since the adoption of the laissez faire and “performance based”  and “price cap” regulatory policies, however, prices have gone up and competition has lessened: Verizon merged with the largest facilities based competitor, MCI. Verizon New York has now abandoned the rollout of its FIOS service in many communities, such as the Albany area, leaving them with a de facto monopoly broadband provider, the cable company.  As a consequence, rather than competition, lower prices, higher quality, greater penetration of both phone and advanced services, the result is the opposite.

The report,  Its All Interconnected: Oversight and Action is Required to Protect Verizon New York Telephone Customers and Expand Broadband Services, examines these issues using publicly available data. The report raises the possibility that expenses for rollout of fiber optic service, which were the basis for prior basic telephone service rate increases allowed by the New York PSC, have been paid by ordinary phone customers, even as the fiber service went to select areas where Verizon obtained cable TV franchises, or for the benefit of “special service” customers.  Although Verizon asserts its broadband services are not utility services, and there are no statutes now saying it is a utility service, it appears that Verizon New York invokes its powers as a utility to install its services on public and private property, and yet deploys its broadband services on a less than a ubiquitous basis, with no plan for expansion of fiber optic broadband service to all areas.  For example, in the Albany area, only a few areas in the suburbs have access to Verizon FiOS service.  In addition to halting deployment of fiber, Verizon officials have been quoted as saying they want to kill the copper wireline services and migrate customers to wireless, rather than providing wireline phone and internet  service.  This result is inconsistent with traditional utility law concepts, i.e., that the use of the public streets and highways, and the state grant of power of eminent domain to acquire or gain access to private property to install facilities for their enterprises, confers a duty upon the utility to provide service to all at reasonable prices, without discrimination, among customers, or against competitors.

The report was authored for the Public Utility Law Project by Bruce Kushnick, of New Networks, and David Bergmann, of Telecom Policy Consulting for Consumers.

Gerald A. Norlander

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