NY City Gets Verizon to Deliver ½ Million Fiber Lines, Covering Low-Income Areas, as Proposed by the IRREGULATORS.
Yet, billions of dollars are still on the table. The next step is to halt the cross-subsidies that could be used to fund upgrades throughout the state, bring in serious competition and to lower prices on all services.
On September 24th, 2020, the IRREGULATORS sent NYC Mayor de Blasio 2 letters.
The first letter requested that the Mayor hold Verizon accountable to provide to 100% of New York City’s households Verizon’s FiOS fiber to the premises (FTTP) cable and broadband service.
As we pointed out, Verizon had an obligation under their NYC franchise to have FiOS service available to all areas of New York City, including low income areas, by July 2014. Unfortunately, an estimated 25% of the City had not been upgraded and most of these are in lower income areas.
On, November 24, 2020, we were pleased that on the heels of our letter, NYC would be implementing much of our proposed plan detailed in Letter 1.
The City had been in a stalemate with Verizon and had even taken Verizon to court in 2017 over this issue. Moreover, the City had issued an Internet Master Plan in January 2020 that did not address solving this commitment but pointed to using wireless as a substitute for home broadband.
But in the interim, America was flung into the nightmare known as the COVID-19 Pandemic, where children are now having to use an online connection, known as ”Telelearning”. In August, 2020, a Zoom-based town hall meeting held by Assemblymember Mathylde Frontus, detailed that whole areas of New York City had not been upgraded and 20%-40% of communities in Brooklyn, Queens and the Bronx did not have the necessary home internet or computers and equipment. This rude awakening shows that the Digital Divide is not somewhere else, but includes areas in our cities, our neighbors; it is not just in some remote rural area and this is not just an isolated incident.
In researching this massive problem, (we had been tracking the Verizon NYC franchise since its inception), during August of 2020, we uncovered that Verizon’s FiOS franchise had expired in July 2020. More importantly, we found that the NYC franchise has specific language that requires Verizon to supply this fiber optic-based service to all areas of the City and to not cherry-pick neighborhoods and deploy FiOS to the wealthier communities. Unfortunately, based on information supplied by the NYC Comptroller, Verizon had not followed the letter of the law and had not upgraded many of the lower income areas.
We also examined the coverage in New York City of Verizon’s fabled 5G wireless and found that it was non-existent and one of the largest concentrations of coverage, based on the Verizon map, was in the Harlem River. Moreover, 5G requires a fiber optic wire every few blocks, so the idea that Verizon had put in fiber optic wires but they had been diverted to aid the wireless company vs the commitment to provide wireline service to all of NYC, would be more than enough for the City to force Verizon’s hand and finish NYC.
We note that this settlement between Verizon and NYC does not permit Verizon’s bait-and-switch substitution of wireless in exchange for a fiber optic wire to the home.
“This settlement is complementary to other City-led efforts underway to achieve the goal of universal broadband, including the Taskforce on Racial Inclusion & Equity’s efforts…New Yorkers need more from the companies that serve them — they need affordable service options. At a time when nearly a third of New Yorkers do not have home broadband, New York City’s Internet Master Plan has made the single largest capital investment by any municipality in the country to end the digital divide.”
But, at the core, inflated prices still needs to be fixed, as competition is not bringing affordable broadband.
The City has had the usual meetings of city officials, with a great deal of hand-wringing. According to the Gotham Gazette:
“At a hearing on Tuesday October 13th, 2020 ‘New York, City Council members sought solutions to the major gaps as they and advocates decried a slow pace of progress that has left far too many New Yorkers behind. According to city data, 40% of households in the city — home to roughly 3.4 million people — don’t have both home and mobile internet connections, and 18% have neither’.”
- New York City Must Call for a Halt to the Billion + Dollars of Cross-Subsidies and Overcharging by Verizon NY, the Public Telco Utility.
Our first letter laid out that the City should get Verizon to fulfill the commitment on the books — 100% of residences in New York City with fiber to the premises with FIOS. Unfortunately, even if the service existed, it will only be an expensive duopoly and not fix the excessively high rates we pay in America, much less NYC.
In the US, we are paying 5–20 times more for wireless service or the cable, phone and broadband package known as the ‘triple play’.
There Are 2 Deep Problems in Lowering Prices.
First, there is collusion and no serious competition for affordable high-speed services.
Verizon NY is the NYC incumbent telecom public utility and part of Verizon New York, the state utility offering FiOS, over a fiber optic line. Spectrum is one of the primary cable TV providers, offering voice, cable TV and broadband-internet — the ‘triple play’. But they are not competitors or a duopoly, but are colluding. Charter-Spectrum has a deal with Verizon to resell Verizon Wireless under the Charter-Spectrum name.
Moreover, all of the taxes, fees and surcharges have become industry standards and common to the triple play, even though much of these are made up fees. There is also the deceptive promotional period, the failure to include all charges in the advertised price, or the prices increasing over 100 % when the promotion ends. Worse, they use of the same industry associations for lobbying and are funding the same groups to support the companies’ public policies.
Finally, FiOS is not even available in 25% of NYC, so the cable company, in some of these areas, is the only game in town. Thus, all of this has enabled massive customer overcharging, as compared to overseas prices.
But there is a much deeper problem.
Second, there has developed a massive financial cross-subsidy scheme that uses the state telecommunications public utility as a cash machine for the companies other subsidiaries that are using the networks.
Note: This financial shell game has been going on for over a decade and is happening in every state.
The second letter asks the City to join our call for an investigation to halt the massive financial cross-subsidy scheme underway where an estimated $1.1-$1.6 billion has been overcharged in just 2019, based on the Verizon New York 2019 Annual Report, published June 2020. As discussed, Verizon funded much of the expansion of its wireless network by diverting construction budgets that should have been used to build out New York City and the rest of New York State with fiber optics. These subsidies must be halted and the funds redirected to upgrade all of New York State at affordable rates.
And these cross-subsidies can be seen in the actual Verizon NY 2019 financial report. However, the idea of there being massive illegal cross-subsidies of the wireless business is not new, just ignored.
Verizon New York has diverted billions of dollars of the utility construction budgets to build out their wireless business for over a decade. In 2012, the NY State Attorney General claimed that 75% of the capital expenditures in New York State went to fund the building of the fiber optic wires to cell sites and to FiOS, a cable service, not to maintain or upgrade the State’s copper networks.
“Verizon New York’s claim of making over a ‘billion dollars’ in 2011 capital investments to its landline network is misleading. In fact, roughly three- quarters of the money was invested in providing transport facilities to serve wireless cell sites and its FiOS. Wireless carriers, including Verizon’s affiliate Verizon offering wireless, directly compete with landline telephone service and the company’s FiOS is primarily a video and Internet broadband offering….Therefore, only a fraction of the company’s capital program is dedicated to supporting and upgrading its landline telephone service.”
Worse, we pointed that in order to fix the affordability issue — not to mention bringing fiber optic networks to the public, the City and State needs to actually examine the financial books and business practices with the goal being to halt the cross-subsidies of wireless and fix the financial shell game we have been detailing for over two decades.
In 2015, we made the same recommendation — for the City to make bold new plans to foster competition in underserved areas.
We submitted “A Truly Bold Plan for New York City’s Broadband Future” in 2015.
“The NYC Mayor’s Office of Tech & Innovation has asked for bold ideas & innovation to ‘help bring high speed Internet to all New Yorkers’, including ‘more choices among ISPs’, and ‘expanded service to underserved communities’, which may require ‘policy change’.”
But that was 5 years ago. Our research and analysis was used in an investigation and settlement against Verizon NY, through the work of the Connect NY Coalition and Communications Workers of America (CWA), in July 2018. Estimated at a value of $300–500 million, Verizon NY was required to deliver 30,000 lines of fiber optics and maintain the copper wires in areas not upgraded.
At this point, we call on those who claim they want to fix the Digital Divide and want affordable prices, to stop using the knee jerk reactions of the past. Had our original proposal, (based on our research as well as the Verizon New York Annual Reports, state and federal filings and orders, etc.) been implemented, we wouldn’t be sitting here wondering why NYC doesn’t have affordable high speed broadband to everyone.
Watch Our New Video: Aunt Ethel Explains the Telco Accounting Scandal that Caused the Digital Divide.
Let’s Fix the Digital Divide — Halting the billions in subsidies caused by the accounting can pay for a fiber optic future and solve the Digital Divide.
Then read the second letter about what the City must do:.