Want to Fix the Digital Divide But You Weren’t Given the Basic Facts?

On June 7th, 2023, the NY City Council held a hearing on the LinkNYC Kiosks and the addition of 5G “cantennas”, (designer cell towers) throughout the city, proclaiming that these would ‘solve the Digital Divide’ and give free Wi-Fi to unserved and underserved areas in New York City.

We submitted Testimony (written)

The IRREGULATORS Demand an Immediate Investigation of Verizon’s Participation in One of the Largest Accounting Scandals in American History.

We Don’t Need the LinkNYC Wireless Kludge; We Need to Solve the Digital Divide — and Not another Wireless Bait and Switch.

On May 26, 2023, the NY Public Service Commission published the Verizon NY 2022 Annual Report. Verizon NY is the largest telecommunications public utility in the state.

Download the Verizon NY 2022 Annual Report

Verizon NY 2022 Annual Report: IRREGULATORS Summary of Findings

And what happens when you cross reference the City’s actions with this Verizon NY financial information? At the core it exposes why America’s prices are 5–20 times more expensive than overseas, and why New York State’s primary wireline infrastructure has been allowed to deteriorate instead of upgraded to fiber optics.

This created the Digital Divide.

Worse, since 2005 there has been a continuous stream of rate increases (known as -(‘Harvesting’) on local wired telephone customers intended to pay for these upgrades to fiber. The low income, rural, seniors, and all other wireline and wireless users have been overcharged — not only by inflated pricing, but worse, Verizon has been charging residential customers for a fiber optic service they paid for but never received; and this includes the year 2022.

Moreover, many municipal Wi-Fi and mobile 5G wireless services have been failed attempts to bring low-cost connectivity services in unserved and underserved areas: but many of these attempts have been continuous ploys to not confront and deal with the massive financial cross-subsidy scheme that has been underway for two decades. The cross-subsidies have been used for the fiber upgrade construction budget to buildout the fiber to the cell towers for its affiliated corporation, Verizon Wireless

Halting these cross-subsidies, which are current, would supply enough funding to upgrade the state with fiber to the home connectivity services — and not these kludge wireless plans — as well as lower prices.

With the $100 billion or more from state and federal subsidies in play, the current plans are to not worry this year. But this is short sighted because the ACP low income funds will most likely dry up, the debt ceiling will start lowering, or more historical, the majority of funds will go to the companies that created the Digital Divide and have the power to start blocking legitimate new builds.

Let Us Start: What We Filed and Documented:

“Solving the Digital Divide” has been the well-meaning battle-cry of municipalities and politicians since the 1990s, and at every turn, more recently, from Mayor Bloomberg or de Blasio, or Adams, wireless is always hyped up as the substitute for a fiber optic future — regardless of whether there were commitments to upgrade the city or state by replacing the existing copper wires with a fiber optic one — which can supply a great deal more capacity. Both, wireless cell service and Wi-Fi, is a kludge, not only because wireless requires a fiber optic wire to the cell tower to work, but because wireless has lots of issues, from the fact that 5G, as a mobile wireless service, can’t handle long distances from the antennas, or worse, Home Internet, which is a fixed wireless service, requires ‘line of sight’ to work. The signal can have problems since trees or another building between the tower and the home antenna can block the signal.

In Part 2 we discuss how LinkNYC has been a disaster on so many levels that it is hard to count them all. First, the original plan was to replace the existing payphones sites with these monolith kiosks, but there was only a partial deployment — about 25–30%. This left 60–80% of the payphones not replaced and millions of callers were left without basic public phone service. Next, when done, there will only be Swiss-cheese coverage, because the range of Wi-Fi is so limited using 5G. The maps provided clearly show that 70–80% of the supposed coverage areas with the upgraded WiFi will still not be able to get the service.

This is a map of a section of Brooklyn that is underserved. On the left is the current deployments and on the right will be after the new kiosks are put in. All of the space that is not red will be dead spaces where the people can’t get WiFi service — i.e; the majority of spaces. And notice these are all on a straight line — which is because they are attached to a fiber optic wire every block.

But the real subplot is worse. The story told is only the Wi-Fi-public face, and it leaves out that these cantennas were designed to have wireless carriers rent space for retail 5G and other services and moreover, this plan is being renewed with the claim that the City will lose advertising revenues and franchise fees. It does not solve the Digital Divide. And, on top of all of this, there has been a failure to pay over $70 million in fees to the City, and some penalties have been applied.

And how does the Verizon FiOS deployment requirements for NY City relate to the wireless cantennas? Verizon was supposed to have 100% coverage of NY City’s residential locations — and thus, there are no ‘underserved’ customers — as everyone in the five boroughs should have been able to at least get a high speed service. And while they may not be able to afford this connection, then the real question should be — why are prices so outrageously priced? This is an especially critical question because prices are supposed to be ‘fair and reasonable’, But the slap in the face is — the construction of any fiber, including the fiber used for wireless is being subsidized by rate increases on local wired telephone services. Most importantly, if there were fiber optic wires in these underserved areas, where are they? Why weren’t they put into use? And why are New Yorkers still being charged for services that they never received?

There is no mention of FiOS or how does it overlay with this map-section of Brooklyn.

But, it is much larger and important series of questions that must be asked, because the outcomes could help to upgrade all of New York State, and impact NY City. Over the last decade, with our experts, we uncovered that the financial books have been manipulated and have made the entire local public telephone utility appear unprofitable — when in fact, the investigations and actions could have helped to generate billions in funds to upgrade the entire state — not through government subsidies but through halting wireless cross-subsidies and other financial machinations that have been left to continue and overcharge New Yorkers, as well as America.

Part 3 Supplies a basic Timeline of the major attempts by former Mayor Bloomberg and de Blasio to have wireless and Wi-Fi helped to solve the Digital Divide, and they all mostly tanked or did not do the job.

Truth is, the wireless cell service has been a bait and switch for the last 3 decades as we have documented over and over again. In fact, as we point out, Verizon’s current FiOS Broadband Internet Home Service is currently a ploy where the fixed wireless (FWA) service is being ‘mushed’ to blur the line of a fiber optic wired service and this inferior wireless service.

Part 4: The Fiber Optic Future We Never Got. In Part 4 we lay out that Verizon failed over and over to deliver on fiber optic deployments that were to take place since the 1990’s, including FiOS, the FTTP, Fiber to the Home service, in 2005, but it is important for the City to realize that there is both a NYC FiOS franchise, as well as issues and commitments made to the rest of NY State, that impact the prices of all services, from wireline to wireless, as well as the corporate expenses and construction budgets, or the charging of customers for the construction.

New York Telephone, then NYNEX, then Bell Atlantic and now Verizon New York had started in 1992 to claim that it was going to replace the existing copper wires with fiber optics and was able to get deregulation, including rate deregulation, at every turn.

In 2005, Verizon claimed it would be deploying FiOS fiber optic broadband to the home and NY State granted massive rate increases on wired customers to fund this “massive deployment of fiber optics” — i.e.; low income families, seniors, rural customers, and everyone else who had service, have all had a continuous series of rate increases, known as ‘harvesting’.

By 2011, Verizon announced it was no longer going to continue to roll out FiOS, and it appears that it would illegally transfer the utility construction budgets to wireless.

Truth be told, (and documented) Verizon had no plans to upgrade the rural areas post the year 2011 — or the low-income urban areas — as this was told to the investor community, but not the public. This has meant that wired customers have been illegally charged for the build out of the wireless networks, for over a decade. and Verizon diverted the utility construction budgets to fund their wireless build out — because it made them more profits.

How did Verizon get away with this? Verizon’s FiOS FTTP, fiber the premises, was built out based on using “Title II”, Common Carrier network classification and therefore is part of the state telecommunications public utility. This directly contradicts Verizon’s statements that ‘Title II’ harmed construction investments. As we show, this was the investment mechanism that permitted Verizon to charge local phone customers thousands of dollars extra per line.

Thus, on one level, Verizon scammed the State, on another Verizon also was harming New York City.

Part 5: Supplies our letter to former Mayor de Blasio discussing the fact that Verizon NY had not fulfilled its obligations to properly upgrade NYC to FiOS.

This Massive Financial Accounting Scandal Must be Dealt with.

Part 6: Supplies our Letter to former Mayor de Blasio: New York City Must Call for a Halt to the Billion + Dollars of Cross-Subsidies and Overcharging by Verizon NY, the Public Telco Utility

All of these actions were done through the manipulation of the accounting rules where the entire state public telecommunications utility is being dismantled — and using these cooked formulas, has turned the state’s critical infrastructure into a cash machine for the use of Verizon’s other subsidiaries, including wireless, content services and foreign investments.

We have attached the Verizon NY 2022 Annual Report, published on May 26th, 2023, by the NY Public Service Commission and it shows massive financial manipulations and cross-subsidies that have been going on for decades.

Download the Verizon NY 2022 Annual Report

And with decades of analysis and documentation — We demand an immediate investigation by the NY City Council, the NY Attorney General’s Office, and the NY State Public Service Commission of over a billion dollars in questionable and potentially illegal cross-subsidies in just Verizon NY, and just for the year 2022.

When halted, this could supply enough funds to build out a fiber optic network throughout the State — as these monies were diverted to illegally fund the company’s wireless mobile and now fixed wireless networks. And it would dramatically lower rates, as the subsidiaries that got a free ride will have to pay market prices for their use of the network.

And all of this is visible in this Verizon NY 2022 Annual Report, and it is also relevant to this City Council inquiry for multiple reasons.

There are many consequences dealing with the Digital Divide.

First, this has allowed Verizon to seriously inflate all prices in New York but it also impacts America, because the underlying parts of the networks, known as backhaul, (the data lines that go to the cell sites or the banks), have excessive profits, and thus all wireline and wireless prices in the US are 5–20 times more expensive than overseas.

Worse, because Verizon never fully upgraded the networks to fiber and thus let the networks deteriorate, this meant there was no high-speed competition to lower prices — and because of this, the cable companies can add made up fees to inflate prices. On top of all this, there is a defacto agreement with the cable companies that gave them the wired-broadband and cable networks — and not have direct competition, and Verizon kept wireless. In fact, Spectrum wireless service is reselling Verizon Wireless. Collusion is not competition, as Spectrum is bundling this with their other services, giving it monopoly advantages for wireline- high-speed broadband, and Verizon for wireless.

On top of all of this, there have been campaigns to rewrite public history and ‘common wisdom’, which over time became the new corporate history.

And with institutional amnesia, we now find that no one understands what happened in their state with broadband, and Verizon (or the other state public utilities in the other states which are served by AT&T and CenturyLink (now Lumen Technologies) are never even mentioned in the new state broadband agencies’ reports.

Verizon has been able to hide in plain sight and, like the diabolical character in a Harry Potter movie, “Voldemort”, Verizon is ‘the person you do not name’.

Part 7: Four Snapshots — America’s prices are out of control compared to overseas countries; we also include a short summary of the Verizon NY 2022 Annual Report.

• Verizon’s Wireless Overcharging per GB, 7,400%-to-65,000% vs Overseas Prices.
• America’s ‘Triple Play’ Prices Overcharged up to $175.00 Per Month or More — Over $2,000.00 Per Year
• Just Released for Public Review: The Verizon NY 2022 Annual Report Shows a Massive, Corrupt, Financial Accounting Scheme.
• Where Did the Verizon NY construction money, charged to local phone customers, go?

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. Members of the group have been working together, in different configurations, since 1999.

New Networks Institute, Teletruth and the IRREGULATORS, 1992–2023

Reports, Complaints, Proposals, Filings and Testimony in NYC and NY State.