The Emperor Has No Clothes: The State Public Telecom Broadband Utility, Exposed.

This chart is from the Verizon NY 2020 Annual Report, published May 28th, 2021. It relies on the FCC USOA accounting formulas that are used in every state we examined, from CA and OH and MI, to OR, WA, and even MS and Colorado, PA, NJ, MA, MD, and NY.

This summary goes through the financials using numbered “lines” and “columns”. Even the most number-adverse person should attempt this because it shows how to fund and fix the Digital Divide, and with enough money to build out entire cities and states, as well as create ‘awards’ for digital inclusion education, etc., and to lower rates. And it should lead to opening these public broadband utilities to all forms of competition.

And yet, no one knew there are telecom utilities. — Here’s the proof.

We note: There is no plan on the table that examines the actual financial books of the state utilities and halts the subsidies. And all of the plans to give government subsidies do not fix the core, repeating problems.

WE DID NOT CREATE THESE FINANCIALS — THEY ARE VERIZON NY, the telecommunications public utility. And there is a public telecommunications utility in every state — hiding in plain sight, and hiding the corrupted accounting you will see for your self.

By the Numbers

Verizon NY 2020 Annual Report — This page is Schedule 9, and it shows 3 lines of ubisness (We left out some items for simplicity and renamed a few to match the ‘common names used in 2020, but changed no number.

USE THE “LINE NUMBER” and “COLUMN” INFO (ROUNDED)

  • Local Service — (Line 1, Column F) had revenues of $1 billion for basic phone lines.
  • Nonregulated –(Line 1, Column C) had revenues or $1.1 billion for VOIP, FiOS Video and previously regulatedl
  • Backhaul (Line 1, Column G) has revenues of $1.8 (“Business Data Services” or “Special Access”), Data services used by business or the wires to the cell sites.
  • Total Revenues — (Line 1, Column B), revenues of $3.9 billion.
  • NOTE: Verizon has other lines of business, including Verizon Wireless, Online, etc.
  • Break-out of revenues, with ‘backhaul’ being the largest, at 46%.

Corporate Operations: (LINE 5) includes the corporate jet, executive pay, lawyers and lobbyists. — Local Service paid $833 million, 61%, of the total.

  • Local Service (Line 5, Column F), is paying 61%, $833 million dollars.
  • Nonregulated category (Line 5 Column C), is paying only 10%, $140 million. Local Service is paying 566% more than Nonregulated.
  • Local Service should have paid maybe $50-$100 million.

Construction & Maintenance: (Line 2) Local Service uses the existing copper wires and it is no longer being marketed. Yet,

Local Service was charged 47%, $1.1 billion dollars; of the construction and maintenance expenditures (Line 2 Column F). Local Service most likely spent only $50-$125 million on the network, at best; the rest of this has been diverted, most likely for Verizon Wireless.

This is the reason cities and towns in upstate New York were never properly upgraded — They left out rural areas and used these construction budgets for wireless.

  • These expenses made the entire state utility appear unprofitable, and it was used as an excuse to not upgrade the state; Verizon never brought high-speed broadband competition to the cable companies — which meant continuous rate increases.
  • Dumping of corporate operations expenses into Local Service made the service appear unprofitable, and that was used as an excuse to ‘shut off the copper’ and rate increases
  • Both the extra construction and the corporate expenses created losses, which also saved money on taxes.
  • Phone rates were increased multiple times for ‘massive deployment of fiber optics’ and losses, since 2005. I.e., customers paid for upgrades of the state infrastructure to fiber, but they were charged for the wires to the cell sites.
  • REDIRECTING the subsidies that should not have been allowed, and halting corporate operations and other expenses that have nothing to do with local service, much less New York or even telecommunications … This also increases the taxes paid, and lowers rates.
  • Punchline: We estimate the state utility has been overcharged $1.9 billion in 2020.

New Networks Institute,Executive Director, & Founding Member, IRREGULATORS; Telecom analyst for 38 years, and I have been playing the piano for 63 years.