Verizon starves land line phone system of money and resources, critics charge

 

That electronic gizmo hooked to your belt or stashed in your purse doesn’t just access the Internet and let you play Candy Crush Saga. It’s also a telephone – and as long as you can use it to call grandma’s landline, some of your monthly cell phone fee will go toward maintaining her old-fashioned phone service. The thinking is that because cell phones and land lines are all part of the same phone system, they have to help pay for each other.

Richard Brodsky

Richard Brodsky

Consumer advocates are raising the issue of whether Verizon is putting enough of its wireless customers’ money toward supporting wired phone service. Former state Assemblyman Richard Brodsky on Monday asked the state Public Service Commission to investigate whether Verizon is paying enough into the land line system. Verizon is eager to shed the land line business, which it says loses more than $1 billion a year in New York, and has declined from 11.8 million customers in 2000 to just 3.5 million today.

Brodsky raises the issue in the context of Verizon’s debacle on Fire Island, where it tried to replace home and business land lines wiped out last year by Hurricane Sandy with an inferior product called Voice Link, which offers voice-only service over the cellular network.

Verizon wants to use Voice Link and cell phone service as an alternative to copper wires in rural areas and other places where land lines are expensive to maintain. It’s tried Voice Link in Sandy-ravaged parts of the Catskills and even in some buildings in Manhattan, according to the Communications Workers of America, its main union.

Fire Islanders came to dislike Voice Link, which is incapable of handling data or fax transmissions (do people still send faxes?). Verizon’s push to replace islanders’ copper wire service with Voice Link brought forward many other complaints about the company at a Public Service Commission hearing last month. Fire Islanders griped not just about Voice Link, but also about the general quality of the services Verizon sells them.

Last week, Verizon caved to the criticism, and promised to build out its fiber optic service on the island. The company will even offer its FiOS Internet service there.

But Verizon’s capitulation did not close out the issue. The PSC is keeping its probe of the matter open at least until next March. And now Brodsky, filing on behalf of Common Cause New York, Consumers Union, the Communications Workers of America, and the Fire Island Association, is challenging utility regulators to press their investigation.

Brodsky’s filing accuses Verizon of starving the land line business of cash, and says customers of Verizon Wireless actually pay less to support Verizon land lines than customers of Sprint and AT&T.

According to the filing, in 2010 – the last year for which Brodsky could find data – Verizon Wireless customers each paid $15.29 per year to support Verizon land lines, while Sprint customers paid $35.39 and AT&T customers paid $37.62. The filing calls this “a significant disparity” worthy of PSC investigation.

Brodsky also says Hurricane Sandy isn’t the only cause of Fire Islanders’ telephony misery. “There is substantial and credible evidence that the primary cause of physical deterioration and service problems is a systematic and intentional policy of disinvestment in the copper system, on Fire Island and across the state,” the filing says.

“Reviews of Verizon capital budget allocations show that over time, the Company has diverted substantial amounts previously expended to maintain and repair the copper system to the build-out, maintenance and repair of the FIOS system. This is in addition to diversion of wireline capital allocations for use in the wireless system.”

Brodsky told NYP&L that Verizon’s Voice Link debacle on Fire Island was a “strategic mistake” that has opened the company to a broad investigation of the deterioration of its copper wire service. “It is clear that Verizon substantially misplayed this issue. They misplayed the entire thing,” he said.

“A set of doors has opened here … They’ve turned this into a much bigger inquiry into the state of telecommunications than anybody ever wanted.”

The PSC hasn’t yet responded to Brodsky’s filing.

“This filing has no basis in fact,” Verizon said in a statement. “These same groups have brought up these same baseless and tired allegations time and time again in the past. Verizon’s landline losses of over a billion dollars a year in New York are the very real consequences of the competition it faces and the antiquated regulatory mandates under which it is forced to operate …

“The marketplace clearly has spoken with its adoption of alternative technologies for its communications needs.  Despite these losses and market restrictions placed on us, Verizon continues to invest in New York’s telecom infrastructure (in excess of $1B each year for the past decade) and to bring new innovations to our customers, rather than rely on the limiting technologies of the past.”

Verizon management blundered on Fire Island in another respect.

At an investors’ conference last year, Verizon CEO Lowell McAdam outlined his ideas about getting rid of copper wires: “[E]very place we have FiOS, we are going to kill the copper. We are going to just take it out of service and we are going to move those services onto FiOS … And then in other areas that are more rural and more sparsely populated, we have got LTE (Long-Term Evolution wireless) built that will handle all of those services and so we are going to cut the copper off there. We are going to do it over wireless.”

By McAdam’s standards, Fire Island wasn’t ready. FiOS wasn’t available to replace the Sandy-ravaged copper system, and to hear Fire Islanders tell it, Voice Link and the local wireless network don’t meet their needs.

Now New York authorities are investigating Verizon’s deployment of Voice Link all over the state, New Jerseyans are fuming over similar problems on the Jersey Shore, and the FCC is looking into the situation. At the very least, Verizon’s mishandling of its Hurricane Sandy mess has brought the company needless regulatory trouble.

My earlier Voice Link posts are here, here, and here. Back in March, Stop the Cap! also reported on the topic.

 

About Bill Sanderson

I'm a New York-based journalist, and a former reporter at the Concord Monitor in New Hampshire, the Bergen Record in New Jersey, and the New York Post. My work has appeared in The Wall Street Journal, MarketWatch.com and Politico New York. Twitter: @wpsanderson.
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