The Verizon New York 2024 Annual Report Just Came Out and It Contradicts Everything; Common Wisdom Is Wrong.

• Read: Verizon NY 2024 Annual Report, (spreadsheet format)
• Read the New Report: IRREGULATORS’ Summary Analysis of Verizon NY 2024 Annual Report
• Read our FCC Filing: How the FCC Joint State-Federal Board created massive financial cross-subsidies with “The 25 year Freeze” — and the Verizon NY cross-subsidies were created using these cooked books.
• Read our FCC filed comments about the FCC’s “Delete, Delete, Delete, e which also gives some of the background and how what you are about to read is tied to the FCC’s previous actions.

This is what massive deregulation looks like — Burdens and harms have been placed on the public, which we will be detailing in the next few stories.

Let me explain:

On May 27, 2025, the Verizon NY 2024 Financial Annual Report for the telecommunications state public utility was released. Common wisdom would have you believe that there are no state telecom utilities left in America or that it is just the ‘legacy’ copper wires, and very few are left. Moreover, they say it is just too expensive to upgrade rural or low income areas, so the plan is to let the telcos just give them inferior wireless vs properly upgrading the customers’ home or the town with fiber optic wires.

And competition? Comcast and Charter are resellers of Verizon, and since the networks were closed to competition with claims of a fiber optic future — decades ago, America’s prices are some of the highest in the world, thus exacerbating the Digital Divide.

And we have little expectation from an FCC where the Chairman parrots the phone and cable companies’ rhetoric— prices are going down, or deregulation works. Prices are continually going up and the foundation of showing deregulatory harms are these financial reports.

Most important, the opening chart shows massive losses of the state utility almost all of it coming from Local Service. Verizon NY overall lost $1.8 billion, and the majority appears to be coming from Local Service.

But a closer examination of opening excerpt from the report reveals that the Verizon NY 2024 Annual Report continues the tradition of massive financial miss-allocations of expenses, missing revenue payments of the other Verizon subsidiaries back for the use of Verizon NY’s networks, facilities and other related expenses and perks that are not being paid, and a host of other seriously questionable accounting practices.

• Local Voice Phone Service offered by Verizon, relies on the existing copper wires, sometimes called POTS, Plain Old Telephone Service, and in 2024, it had about $551 million dollars in revenues. (f, 9)

To dramatize the opening, we call your attention to:

• Corporate Operations Expense Excess: How is it possible that Verizon NY wired Local Service line of business was charged almost $800 million dollars in Corporate Operations expenses in just 2024, 61% of the total charged to VZNY.
• Corporate Operations is a garbage pail of expenses that includes lawyers, lobbyists, the corporate jets and even golf tournaments.
• In fact, Local Service did not create these expenses, and this represents over $1,050 per line.
• Construction Budgets Diverted: Local Service was charged $864 million in “construction work in progress”, (as documented in a different report schedule) while on this schedule it shows Local Service paying $944 million in construction, (F, 10) almost double what the Business data and backhaul (wires to-for banks or wireless services) are paying.

Verizon NY’s 3 primary lines of business listed in the report:

§ Local “POTS” phone service using the existing copper wire.

§ Nonregulated, that includes FiOS video and VOIP calling.

§ Data Services, usually called “Backhaul”, “Business Data Services”, “BDS”, or “Special Access” they are used by banks, hospitals, or to hot spots or cell sites.

§ NOT INCLUDED: Verizon’s Subsidiaries. Wireless Revenue, Cable Revenue, among other services that use the networks but are not included in the overall revenue ot Verizon NY, the utility.

A Moment in History, Yet America has Amnesia and Common Wisdom is Wrong.

This financial report and our analysis comes on the heels of changes in the government BEAD money of $42 billion that was supposed to solve the Digital Divide. Now, the states are being required to redo their funding requests as part of their 5-year plans, the calls for satellite and wireless solutions invade the landscape that was supposed to bring, finally, a new fiber optic future.

As we will highlight, this financial report directly contradicts all sides of the equation on how to best solve the Digital Divide, No one we spoke to knows that there are still active state telecommunications public utilities in every state, that they all had commitments to do upgrades of their networks from copper to fiber,

The current FCC “Freeze” proceeding that has kept the allocation of expenses constant “frozen”, since 2000 — is one of the largest accounting scandals in American history.

How can these financial results look the way they do with these massive financial cross-subsidies?

And to stay current, we fast forward; this annual report is based on a corruption of the USOA accounting formulas that started with the FCC’s ‘Freeze’ that made Local Service become a cash machine for all of the other lines of business

The irony? There is an active FCC proceeding pertaining to this freeze, and this Verizon NY 2024 Annual Report is using the allocation formulas for expenses that are based on the year 2000. The FCC never adjusted these formulas, and in fact, extended the FREEZE until 2030.

The IRREGULATORS (with New Networks Institute and TeleTruth) have been examining these issues for decades and have an entire library and will present this work separately.

NOTE: In our challenges of the FCC’s failure to fix these massive cross-subsidies, and having filed multiple times with the FCC, 2017–2019, (with Brendan Carr as General Counsel and then Commissioner, and Ajit Pai as Chairman,) IRREGULATORS vs FCC’s conclusion — the court specifically made clear that the FCC no longer has the jurisdiction over this accounting and the states can fix this mess. So far there the FCC hasn’t examined the accounting flaws, evident in this opening chart.

Be advised that what we will discuss is most likely happening in every state as the USOA accounting was applied to all of the Verizon, AT&T and Lumen state utilities.

Thus, the answer to the question is — the accounting used to allocate expenses of Corporate Operations was set in the year 2000 and never changed; Local Service always paid around 60% because in 2000, Local Service was 65% of the revenues; in 2024, Local Service was only about 16% but still paid 62% of that one expense.

And just to show the length and breadth of this maneuvering of the accounting, this chart shows the actual percentage of the Corporate Operations expenses applied to Local Service and the percentage of the revenues of Local Service as compared to the total. From 2003–2017, which was filed as part of our collection of work we delivered to the FCC — a complete analysis to correct these financial burdens on the public

Thus, the expenses being applied to Local Service in 2024 are not based on actual expenses incurred by the Local Service line of business, but through a corrupted accounting that the freeze created, which, in turn, created the Digital Divide.

• More about: FCC Jurisdictional Separations Federal-State Joint Board

We will go through some of the highlights of our findings. Please read our entire report for more details.

• The Verizon NY 2024 Annual Report (spreadsheet format) Report was just released on May 27th, 2024

1) The Basic Wired Utility is Used by Multiple Lines of Business.

• Verizon NY is the largest telecommunications public utility in New York State and was established in 1896.
• Originally part of the Bell System. Today Verizon’s ‘footprint’ of states served, like AT&T’s footprint, is comprised of these state telecommunications utilities.
• Verizon New York is a wholly owned subsidiary of Verizon Communications Inc., the holding company.
• Verizon New York is the only state telecom utility we know of that does a full Annual report and publishes the information.
• These reports are required and based on the Uniform System of Accounting, USOA.
• IMPORTANT: Verizon New York’s financials are almost identical to all of the other Verizon, AT&T and Lumen state utilities as they were all using this USOA accounting in 2007, the last year the FCC required that the state utilities give the FCC their annual reports with other business information.
• IMPORTANT: The cross-subsidies were caused by the FCC’s failed deregulation where the actual formulas for the allocation of expenses are set to the year 2000 and with a dysfunctional FCC Joint State Federal Board, the examination and clean up of the freeze formulas on the accounting were renewed these through to December 2030.
• IMPORTANT: While the FCC does not have jurisdiction over the accounting in the states, the states are clueless to this fact and no state we know of has done a full examination of the cross-subsidies or how they have undermined the publics’ interests.

2) The Relative Size of the Revenues and Division of Expenses.

These are the percentages of how the revenues and expenses are allocated to each line of business.

Local Service (Column F) are the copper-based phone services that are no longer being sold, that are not being upgraded and are considered ‘legacy’ or obsolete.

• Local Service Revenues (Column F-9) were 16% of the Total Revenues, $551 million as compared to Nonregulated and Backhaul and
• Backhaul (column G) and other lines of business using these networks are hidden in the books. Of the almost $2.9 billion dollars in revenues for Backhaul as well as Nonregulated,, there are zero access lines given, copper or fiber. (C-9+ G-9).
• Local Service is paying the majority of Construction, (F-10) $944 million but it is not spending the money to do upgrades of the utility networks, fraction of the total CapX
• Elsewhere, Local Service is shown to be paying 77% of the total ‘work in progress’, when it is not being spent on the utility’s commitment to the customers.
• Marketing (Row 12) is out of control with Local Service being charged the majority of the expenses, with 51%, while nonregulated (Fios) are only 31% — There is no actual marketing in 2024- to purchase a new copper wire they are no longer selling.
• Corporate Operation (Row 13) are the lobbyists, lawyers and the corporate jet and golf tournaments, and it is paying 61% a whopping $800 million (rounded).

In fact,

Combined, the wired utility Local Service with 16% of the revenues — about $550 million, is paying the majority of all of the expenses.

3) Manipulation of Accounting of Access Lines: Exactly How Many Basic Copper Lines Are Still In Service?

This mostly redacted information chart never mentions that of the Verizon NY access lines in service, the majority are hidden from view. This showed that at the end of 2024, Verizon NY still had about 750,000 lines.

Garbage. From the USTelecom Association for the wireline utility companies, to the FCC, the state commissions or the media, all America sees are manipulated accounting numbers. Here’s how they create it.

Example: A man holds up his hand and says — “How many fingers am I holding up? When you answer 5, he replies “Wrong. This is a thumb, this is a pinky, so there are only 3.”

The phone lines are classified as ‘Telecommunications”, “Title II”, whereas the data lines are ‘information service‘ lines, “Title I”. W elcome to the core.

The FCC et al want to make it appear that there are not a lot of copper access lines left, and that the copper wires are ‘the state utility’, not the fiber lines or information service lines, like VOIP, — and these are both manipulated storytelling. So, in order to keep that fiction, these lines are not included as lines.

• All of the data lines are missing.
• All of the fiber optic lines, including FiOS, are missing.
• All of the data lines that go to cell sites or hot spots.
• All of the DSL lines and some number of all of the business data lines from alarm circuits or a city pump station can be copper and are missing.
• AT&T’s broadband, internet, TV and voice service known as U-verse, are still based on the existing copper wires that are already going to be used for phone service. But, because these are classified as an information service, then, the actual copper wires have been reclassified as “NOT AN ACCESS LINE”

Our research for the last 2 decades indicates that approximately 70–90% of the copper as well as the fiber lines are not being counted.

And some more details as to — -Why are they doing this?

• The public policy implications have been to claim since everyone is ‘dropping’ their copper line, we don’t need to upgrade them to fiber.
• There isn’t enough money to do upgrades of the copper to fiber, so we should just push them onto wireless
• As this report shows, the decline in lines has been used as an excuse for rate increases.
• Getting rid of Universal Service “Carrier of Last Resort”, obligations or getting rid of the unions staffers that work for the utility, are juast a few items of responsibilities that would go away. Ie, having an obligation to offer service because you are the utility, and making sure the company can deliver and maintain the networks are considered just an expense to be removed.
• Wireless is cheaper to offer, because a physical line does not have to go to the home or office.
• Wireless has been a bait and switch used in many states, such as New Jersey, where wireless became, at DSL speeds, allowed instead of a fiber optic service that started at 45 mbps in both directions, which was part of the original fiber plan of 1993.

As we discuss in upcoming reports, while these are partially true, none of these reasons are based on facts.

4) The Construction Budgets Were Illegally Charged to Local Service.

This next chart, however, is what should have been a major concern over the last 2 decades in every state. This is an excerpt from the Verizon NY 2024 Annual Report showing that the Local Service category is paying 73% of the total ‘work in progress’ construction budgets as well as supplying the working capital, making the total over $864 million dollars.

Local Service is the intrastate revenue that comes from basic POTS, wireline copper phone service.

• Verizon is no longer seriously maintaining the copper wires
• Verizon is no longer actually selling POTs phone services
• Local Service should NOT be paying more than nonregulated, which includes FiOS and VOIP, as well as ‘backhaul’, the data services, like the special access lines to the cell sites.

But, the percentages of what each line of business is paying is from the year 2000.

5) Where is this CAPX Going? — The Illegal Transfer to Wireless.

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, not to the maintain 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.”

6) Fios Fiber Optic Wires Were Classified as “Title II”, to be Part of the Utility.

The quote below is from the Verizon New Jersey FiOS Cable TV ‘statewide’ deployment of fiber to the home, starting 2006–2007, and published by the NJ Board of Public Utilities. This language is in almost every Verizon FiOS cable franchise, as we pointed out in our 2014 Net Neutrality filing.`

There is almost identical language in the Verizon Pennsylvania, the Verizon Massachusetts FiOS cable TV plans, or even the FTTP fiber deployments in NY

This is a current 2025 quote from the renewal of their FiOS Cable TV franchise in Village of Roslyn Harbor, NY State. Notice that it mentions that Title II and telecommunications are all part of this story

STATE OF NEW YORK PUBLIC SERVICE COMMISSION

Petition of Verizon New York Inc. for Approval of the Renewal of a Cable Television Franchise with the Village of Roslyn Harbor (Nassau County)

April 2, 2025

“Case 25-V- PETITION FOR APPROVAL Verizon New York Inc. (“Verizon”) respectfully petitions the Commission to approve, pursuant to § 222 of the Public Service Law and Commission Rule 897.3, the renewal of Verizon’s cable television franchise with the Village of Roslyn Harbor (the “Village”) for a five-year period. In support of this Petition, Verizon states as follows:

“2.2. The FTTP Network: Upon delivery of Cable Service, by subjecting Franchisee’s mixed-use facilities to the NY PSC’s minimum franchise standards and the LFA’s police power, the LFA has not been granted broad new authority over the construction, placement and operation of Franchisee’s mixed-use facilities; provided, however, that nothing herein shall be construed to limit the LFA’s existing authority with respect to the Franchisee’s mixed use facilities pursuant to Title II of the Communications Act, Section 27 of the New York Transportation Corporations Law…”

Continue to the full report.

Analysis of Verizon NY 2024 Annual Report

• Read the rest of our report: IRREGULATORS’ Summary Analysis of Verizon NY 2024 Annual Report