Halt the NYC Wifi Plan Clusterfork; Investigate Verizon NY’s Massive Accounting Scandal

Dear Reporter, Advocate, Politician or Digitally Divided

The Verizon NY 2022 Annual Report was released to the public May 26, 2023.

• Download the Verizon NY 2022 Annual Report
• Verizon NY 2022 Annual Report: IRREGULATORS Summary of Findings

The NY City Council had a hearing on the LinkNYC Kiosks and the addition of 5G “cantennas” held on June 7th, 2023.

• We submitted Testimony (written)
• The IRREGULATORS summary of our NY City Council filing:
• The Verizon Fiber Optic History of New York State and NYC.

What happens when you cross-reference the City’s actions with this Verizon NY financial information? At the core:

• The IRREGULATORS demand an immediate investigation of Verizon’s participation in one of the largest accounting scandals in American history.
• The LinkNYC Wireless plan is another wireless bait and switch.

‘Common Wisdom’ has Institutional Amnesia.

Based on our interviews and research, we know virtually no one has read the Verizon New York Annual Reports or knows that Verizon NY is the largest state-based telecommunications public utility in the State.

Common wisdom also believes that if the utility does exist it is just the aging copper wires offering phone service to a continually diminishing number of customers.

Moreover, common wisdom now claims that wireless services, especially Wi-Fi, should be used to give high speed connections to rural or low income areas, and NYC has been attempting to put out plans to accomplish this goal for decades — all to solve the Digital Divide.

Others will argue these are legacy accounting anomolies, that they no longer apply or are in use, and that the ‘losses’ are created by the loss of lines, not cross-subsidies. And they would add “you can’t go after rates, or wireless rates, and with deregulation, this is all historical and the markets moved on, and prices are ‘just and reasonable’

— and the others, quoting common wisdom, would all be wrong.

Verizon et al. created the Digital Divide, and yet Verizon is being paid billions for state upgrades to the network. First, the fiber optic services that are used for FiOS, wherever they were put, are actually put in as ‘Title II’, common carrier networks and are part of the state utility. And the plans for the last three decades were to claim that the companies would be replacing the aging copper with fiber optics.

FiOS cable TV service is based on these wires as stated in the franchise licenses. In 2005, the NY Public Service commission granted Verizon NY massive rate increases on basic wired customers to fund these plans — and these rate increases have been continuous and are still being collected — This is known as “harvesting”.

Alongside this, Verizon NY, the state telecom utility, covers NY City and Verizon has had a franchise since 2008 to have 100% of residential locations wired to be able to get these services, which was supposed to be completed by 2014.

Verizon NY also made claims it would be upgrading cities and towns in upstate NY, but by 2010–2012, Verizon announced it would be halting these upgrades.

Verizon illegally built out their wireless business instead of fiber to serve NY. And adding insult to injury, the State, instead of halting the increases, did not notice that Verizon diverted the construction budgets of the utility to illegally fund their building out of their wireless network — but still charging the local subscribers for these builds.

The Books are Cooked: Verizon manipulated the accounting — At the same time, starting in 2001, Verizon and AT&T et al, were able to manipulate the actual accounting formulas that turned the entire state utility into a cash machine for their other lines of business. The FCC helped by not examining the accounting for 20+ years; in fact no state has audited the books. That’s why these financial results are outrageous.

• Local Service has paid 60% of all corporate expenses in Verizon NY, even though it only generated about 20% of the revenues by 2022. That’s everything from exec pay to the corporate jets. And it was charged over $650 million in construction that is obviously not for local telephone service. Verizon has even stopped selling basic phone service.

This has meant massive profits for ‘Backhaul’, the basic data services that go to the cell sites, and other services like wireless, because they are using the utility’s critical infrastructure but are paying a fraction of the expenses, On paper, this makes local service and the utility appear unprofitable — so they can claim that they can’t afford to upgrade the state.

In 2020, the pandemic hit, and we suddenly realized that America does not have high speed broadband in many areas, including rural areas and inner cities. And instead of questioning how this happened, the government has been rewarding the companies with massive financial government subsidies,

The cable companies were able, all along, to let it play out because Verizon supplied no serious wireline broadband competition. Instead, Verizon kept building their wireless network — and so Charter is now reselling Verizon Wireless, under their own brand. This is Collusion 101.

NYC’s WiFi Fiasco Bait and Switch New York politicians have continually decried the lack of broadband and that the prices were too high, so let’s give the low income families free WiFi — And this plan has been in place for the last decade and fails every time.

The LinkNYC plan is a clusterfork of issues. The plan started over a decade ago and was supposed to replace the existing payphones in NY City with a kiosk.

• Of the 7,500 kiosks due by next year, in 2021 there were less than 2,000.
• There were 9,000–12,000 payphones, with over 27 million calls per year — all shut off. With less than 1,000 kiosks by 2019, the City screwed millions of people who relied on a public phone.
• Redlining: Moreover, these kiosks were mostly put in wealthy areas in Manhattan.
• And some of the companies defaulted on $75 million dollars.
• The new plan is to use these ‘poor’ people as an excuse, with the sub-plot: put in kiosks to sell advertising that generates income for the City and to have carriers sell retail wireless services in ugly new cell sites.
• Finally, the maps provided are Swiss cheese as 5G only has a range of 450 feet, so 60–80% of the coverage area was not covered for ‘low income’ WiFi.

And what about FiOS? Verizon NY was taken to court pertaining to FiOS in NYC, and is supposed to have the work now completed by July 2023. If this is the case, then the wireless deployments that are supposed to bring crap wireless to the underserved areas is not needed since every part of NYC should have high speed service, right?

America’s prices are out of control. Because Verizon controls not only the wired networks but also the wireless infrastructure — they control the price of all services, especially the bottom-line wholesale pricing; without competition, cable gets to add made up fees on all services. How is it possible that the wired cable company and the wired phone company (which is also the wireless company), can have deals to bundle the wireless services with the cable package?

In order to solve the Digital Divide, NY State needs to halt all of the illegal cross-subsides that continue even today. The Verizon subsidiaries must pay market prices for their use of the network as well as pay back all for the previous corporate hanky panky.

Moreover, if customers have paid, in aggregate, billions of dollars and still did not get the services, these networks should be open for competition, with lower prices for all consumers and as the clawback of the overcharging. The cities and counties should get those revenues so they can fund the wireline networks that were promised but never built.

And the kicker — — based on reports, there should be millions of miles of fiber optic wires that were never lit so the cities and counties can put into service.

The Public must decide if these egregious acts violate state and federal laws, and the companies should be held accountable, and not rewarded with government subsidies or to prop up another failed WiFi plan.

New York State is the only state reguiring a full financial annual report that we know of, but the exact same shinanigans are in play in every state- How is it possible that institutional amnesia has taken over the storyline — Is their market power such that they can rewrite history or hide in plain sight?

The IRREGULATORS is an independent, consortium of senior telecom experts, analysts, forensic auditors, and lawyers who are former senior staffers from the FCC, state advocate and Attorneys General Office experts and lawyers, as well as former telco consultants.

Reading Library, our filings, testimony and complaints, and Resources for New York