Telephone Subscribership of New York Households Declines Again in 2013 — New York Now 48th of 50 States

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The FCC’s 2013 Universal Service Monitoring Report with data through October 2013 again shows New York slipping in terms of the percentage of households with telephone service.

The National average household telephone penetration is 96%, but in New York state only 94.1% of households have phones; 5.9% of New York’s 7,230,896 total households,  means  426,622 households are without phone service.  With an average of 2.6 persons per household, that means 1,109,219 New Yorkers do not have a phone in their household.

This now puts New York third from the bottom of the 50 states, ahead of only Indiana and West Virginia.  See Table 3.8 of the report.

This consistent decline in telephone service penetration parallels the New York PSC’s establishment of a “price cap” or “performance regulation” regime that does not measure or impose financial consequences regarding critical matters such as wrongful denials of applications for phone service, wrongful terminations of service, compliance with the Telephone Fair Practices regulations,  higher prices allowed for “basic” service and much higher prices for “nonbasic” services beyond bare-bones “basic service” , facilitation of partial payments to preserve phone service for “triple play” customers who fall behind in paying for “bundled” phone, internet and TV service, and enrollment of all eligible low-income customers in the Lifeline and LinkUp assistance programs.  The regime established by the Commission, therefore, places almost no value on reaching universal service goals.

Eight years ago, New York’s Utility Project called to the Commission’s attention that Lifeline enrollment was inadequate and that telephone subscribership in the state was slipping.  The Commission summarized our points as follows:

“[Mew York’s Utility Project notes] the reduction in the telephone penetration rate which has occurred over the last five years, noting that “the decline in telephone service penetration rates in New York between 2000 and 2005 represented an estimated 300,000 households which lacked basic telephone service but who would have had such service if penetration rates had not declined. [The Utility Project] goes on further to state that “there are at least 250,000 households in New York today that are eligible for the Lifeline assistance, but do not receive it.”  The parties strongly argue that this trend should be reversed. [The Utility Project] expresses concern that its initial comments regarding the significant decline in telephone service penetration rates and Lifeline subscription rates were largely ignored. Overall policies can only be adopted, according to [the Utility Project], when meaningful strategies are developed to address the decline in telephone subscribership and the level of participation in the Lifeline program.“

At that time, the Commission dismissively brushed off the evidence of slippage in the universal service objective and the impact of rate increases and deregulating nonbasic charges, stating:

While we would certainly share [the utility Project’s] concern if the magnitude of such a decline could be confirmed and its cause identified, we question whether the decline cited actually reflects a change in New Yorkers’ access to telephone services, a change in the method by which the data were collected, or some other data anomaly.* * * *  We anticipate that the rate increases that might result from the pricing flexibility we authorize here will not undermine universal service. The rate increases to message rate service has been limited and should not undermine universal service.* * * *

CASE 05-C-0616 – Proceeding on Motion of the Commission to Examine Issues Related to the Transition to Intermodal Competition in the Provision of Telecommunications Services. STATEMENT OF POLICY ON FURTHER STEPS TOWARD COMPETITION IN THE INTERMODAL TELECOMMUNICATIONS MARKET AND ORDER ALLOWING RATE FILINGS (Issued and Effective April 11, 2006), p. 76 – 79.

Since 2006, the last time the PSC assessed its style of telephone regulation– or more aptly, deregulation — more and more New Yorkers are without phone service.  See

The PSC can no longer blind itself to reality or suggest the falling subscribership is due to a “data anomaly” as it said in 2006.  

  • The data is from the FCC
  • the FCC survey is uniform across all the states, and
  • New York has sunk to near the bottom in this important measure of universal service.  

Under the Commission’s laissez-faire approach to phone company regulation there is  insufficient attention given to solving the subscribership problem.  Indeed, the Commission appears still stuck in 2006, as if there is no problem.

The idea that a “competition” among just three main providers (and often less) would keep rates down and achieve public interest goals and universal service  is ludicrous.  See DOJ/FTC Merger Guidelines, regarding market concentration. There appears to be no vigorous competition to keep customers living in poverty, who may have payment difficulties or other problems, connected.  Yet, in this age of the internet, phone service is more necessary than ever.  Many businesses and government agencies, including utilities, have established call centers to conduct all or nearly all business with consumers.  Also, Niagara Mohawk has closed all its customer service offices, and Con Edison has only one walk-in service center in each borough.   It is possible that with so few providers an equilibrium is reached where they do not compete to serve persons requiring more customer service.  See Eduardo Porter,  Concentrated Markets Take Big Toll on Economy, The New York Times, May 27, 2014.   

In any event, the evidence is in that in the eight years since the New York PSC began to rely on hoped-for “intermodal” competition among three providers —  wireline, wireless and cable companies — to substitute for regulatory measures, matters have gotten worse with respect to achieving universal service goals that are in the public interest.  Without everyone reachable by phone, the value of the telecommunications network  is diminished — for everyone. 

A  report issued by the Utility Project calls for a new review of the PSC’s telephone deregulation policies. See NEW REPORT RAISES QUESTIONS ABOUT VERIZON PHONE AND INTERNET SERVICES: “IT’S ALL INTERCONNECTED”,  May 15, 2014.  There needs to be another look at the serious problem — sidestepped by the Commission in its 2006 policy review — of reduced phone service for many vulnerable low-income New Yorkers. 

The PSC should also scrutinize closely the practices of Comcast and Time Warner in their provision of phone service in the proceeding to review their proposed merger, particularly matters such as  denials of applications for phone service,  terminations of service, compliance with the Telephone Fair Practices regulations,  upselling of low income customers to high priced service options, facilitation of partial payments to preserve phone service for “triple play” customers who fall behind in paying for “bundled” phone, internet and TV service, and enrollment of all eligible low-income customers in the Lifeline and LinkUp assistance programs.  Comcast should be required to provide its phone customers the protections of the Telephone Fair Practices regulations (TFPA) and Lifeline assistance, as Time Warner did last year. See   TIME WARNER PHONE CUSTOMERS PROTECTED. OTHER CABLE PHONE CUSTOMERS? Also, the Commission should assess Time Warner’s service quality reports, which have been submitted to the Commission under a claim of trade secrecy, and Time Warner’s implementation of TFPA and Lifeline.

Gerald Norlander

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