IRREGULATORS & NNI File to Halt the Proposed Verizon NY Settlement & Call for a Continuation of the Investigation.
Billions in Wireless Cross-Subsidies, Customer Overcharging, Failure to Upgrade Cities & Questionable Tax Losses are at Stake.
Governor Cuomo Implicated in Eliminating these Investigations.
On March 2nd, 2018 a settlement was proposed between Verizon New York, the state-telecommunications utility, and the NY Department of Public Service, (NYPSC), joined by Communications of America, (“CWA”), and Public Utility Law Project), (“PULP”) to end an investigation that started in 2016, but was part of a series of proceedings over the last 5 years at the NYPSC. This investigation had 2 parts:
- Part 1: Verizon has left the state copper-based utility networks to deteriorate and there has been a lack of upgrades to broadband or even maintenance of the existing networks.
- Part II: There has been massive financial shell game between the state utility, Verizon NY and the other Verizon subsidiaries, especially Verizon Wireless.
While there are some basic fixes to the neglected infrastructure, Part 2 has been eliminated from this proposed settlement.
Over the last 8 years New Networks Institute (NNI) and the IRREGULATORS have uncovered a massive financial accounting shell game where billions of dollars have been charged to local phone customers, making the state utility networks a cash machine to fund all of the other Verizon businesses, including the wireless networks. These cross-subsidies cost customers thousands of dollars extra and diverted billions in construction to roll out the wireless networks instead of upgrading cities, among other harms. In fact, our work helped to initiate these investigations.
And these issues need to not only be investigated but the cross-subsidies need to end immediately. And yet, this proposed settlement fails to even acknowledge the years of investigations by the State or addresses any of the primary problems.
Moreover, Governor Cuomo’s fingerprints are all over the elimination of the investigations to help his broadband plan and to give other gifts to his corporate friends. Tucked away in the NY State budget was some telco-written wireless legislation that aids in the removal of city regulations and any examination of what the phone companies want to do for a non-existent wireless service, “5G”. (It was removed, but it will be back.)
Why is this Critical Now?
FIRST & IMPORTANT: Most people do not understand that there is still state telecommunications utility, like water or gas or electricity. And most people believe that the utility is just the aging copper wires — they have been misinformed. All of the wires, including the Fiber-to-the-Premises, (“FTTP”) for FiOS, or the wires used for the cell sites for Verizon Wireless, as well the Business Data Services –not to mention the aging copper wires, are ALL part of the state utility infrastructure and have been paid for mainly via the wired customers.
SECOND: Verizon et al. have been dismantling the state utilities slowly for the last decade with the plan to make the wires private property for personal use (which will block and harm competitors) — removing any remaining regulations or obligations, to be handed over to the wireless company. But, the construction expenses for new builds will still remain mostly in the state wired utility, and the perks of being a utility will be available to the wireless company. At the same time, the pricing for service will move to the wireless per-gig plan to make more money.
As we exposed, using manipulated accounting, Verizon et al. have made local service ‘appear’ unprofitable, but this has been artificial. The state utility now pays the majority of expenses, including construction, or “corporate operations” expense for all of the subsidiaries using the wires. And this manipulation means that they had major losses and major tax benefits, got the State to raise rates multiple times, and yet Verizon can complain that they can’t afford to upgrade rural areas or finish or even maintain cities.
Third: Control Over Your Services: If you use your cell phone, if it is from Verizon, it goes to a cell site then to a Verizon wire, most of which are part of the state utility. And at home, Verizon’s plan is that your ‘high-speed’ cable TV will also be wireless. But, ironically, it requires a fiber optic wire, which would also be part of the state utility, but unidentified. Add to this, competitors who use these network wires will pay through the nose or not be allowed access.
Net Neutrality, privacy, and all other aspects of communications are also in the cross-hairs. Getting rid of Net Neutrality allows the company to have the company’s other subsidiaries be the priority, and getting rid of privacy allows your information to be shared and to track you, then sell that information or give it to their subsidiaries.
FOURTH: This Is a Nationwide Problem: This is not just a Verizon NY problem. All of the Verizon, as well as AT&T and CenturyLink holding companies control the state incumbent utilities, and they have used the same accounting and business practices. Verizon NY just happens to be a fully documented model of the issues.
FIFTH: The FCC has been captured and is helping the companies in every possible way with 15–25 interlocking proceedings, like Net Neutrality, privacy, or ‘shutting off the copper’ and preempting state laws to give the companies complete control.
SIXTH: This is the End Game. There are too many moving parts to explain, but once the state utility is confiscated and the networks dismantled, because one company controls not only the infrastructure, but the other critical services using this infrastructure, they get to control the price of all services, including wireless, or broadband; they can control the speed, and they control who gets upgraded.
Read Our Filing We’re calling for a halt to this Verizon NY gift and continued and expanded investigations because it exposes all of the financial flows of money and the cross-subsidies between Verizon New York and the affiliates. If we don’t do it, all of these next-step bad public policy actions will get worse.
Need More Details? CLICK for a Fact Sheet 2-Pager to see a few more details of this manipulated accounting. Here’s a few:
- Verizon NY Didn’t Pay Most Taxes: Since 2010–2016, Verizon NY lost $15.7 billion and didn’t pay most taxes; instead Verizon had tax benefits of $7.2 billion.
- The Utility Illegally Funded the Wireless Networks. From 2010 to 2012, alone, Verizon NY paid about $2.8 billion to build out the fiber optic wires used by Verizon Wireless — and that money was charged to local phone customers.
- Local phone customers paid over $1000.00 extra, per line, in rate increases since 2005. Worse, local phone customers have been paying around $500 extra a year; the actual costs to offer the copper-based services should have been in steep decline, and prices should have followed.
- Low income families, seniors, small businesses — rural areas — all paid thousands of dollars extra.
- There is no cable competition and the Verizon cut a deal with the cable companies to bundle wireless and/or let them rent the wireless networks.
CLICK TO PLEASE FILE “LATE” COMMENTS TO ENDORSE OUR PLAN:
NOTE: There was a ‘comments’ period at the NYPSC which ended April 16th, 2018 and you (and everyone else) missed it. Thousands of people, companies, cities and politicians participated and testified in the previous related proceedings, but for this decision, the State failed to properly notify these people and organizations — anyone — about this proceeding.
- We request an extension of the current comment period until July 15th, 2018 to examine the Verizon NY 2017 Financial Annual Report, published May 31, 2018.
- We are calling for a halt to the proposed settlement between Verizon, NY, the NYPSC and parties, which has eliminated all mention of the investigation of the financial cross-subsidies between Verizon NY and Verizon’s subsidiaries
- We are calling for the NYPSC to continue to investigate the billions of dollars in cross-subsidies between Verizon NY and Verizon Wireless and the other Verizon subsidiaries — then fix this ongoing financial shell game.
About Us: 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, and former Telecom consultants. Members of the group have been working together, in different configurations, since 1999.
Click and visit our library of data, analysis, filings, etc. This is mostly dedicated to Verizon NY and the FCC’s current policies.