Why you can’t get Verizon FiOS in New York City

 

You can’t get Verizon FiOS in much of New York City because Verizon has broken its agreement to build out its network, the city says.

Mayor Bill de Blasio ripped Verizon’s failed promises in an audit released June 18 that says Verizon has failed to comply with its October 2008 franchise agreement with the city. The scathing report “documents far-reaching failures and reveals that more than six years after its agreement with the City, Verizon has yet to deliver on the commitments spelled out in the franchise agreement,” a press release from de Blasio’s office says.

It all comes down to the definition of the word “passed.”

Verizon FiOSUnder the 2008 franchise deal, Verizon agreed that FiOS lines would have “passed” all homes by the end of 2014. “Passed” is a term of art in the cable and communications business that apparently is so common the city and Verizon did not bother to define it in the franchise agreement. That was a bad call by the city’s negotiators: Verizon’s parsing of the word “passed” is in line with Bill Clinton’s parsing of the word “is” in the days of the Monica Lewinsky scandal.

In the audit, the city cites the definition of “passed” used by the Fiber to the Home Council, an industry group:

The number of “Homes Passed” is the potential number of premises to which an operator has capability to connect in a service area, but the premises may or may not be connected to the network. This definition excludes premises that cannot be connected without further installation of substantial cable plant such as feeder and distribution cable (fiber) to reach the area in which a potential subscriber is located.

That’s not how Verizon saw it. It decided the term means:

[G]oing by, past, beyond, or through a place (such as a building), and include[s] no requirement as to how close a place must be approached in order to constitute a ‘passage.’

In practice, the city says, this is how Verizon’s use of the word “passed” has panned out:

Verizon considers all the addresses on a block “passed” if their fiber is in conduit under or on poles over any street that serves as a boundary to that block. Verizon does not deem it necessary for that fiber to have been pulled to a point of entry on the block for the block to be deemed passed.

So the way Verizon sees it, if you live, say, at the corner of West 138th Street and Edgecombe Avenue in Harlem, and Verizon has a FiOS line on Frederick Douglass Boulevard, then Verizon would say FiOS has “passed” your home because its line existed a block away. By this definition, Verizon says, FiOS has “passed” 100 percent of the city’s homes.

Even Time Warner Cable and Cablevision — companies not known for decent customer service — have a better definition of the word “passed.” As the audit explains:

Our understanding is that the cable television industry defines a building as “passed” if it is immediately adjacent to cable facilities and an order for service can be processed by the cable company.

The city got on to this issue because of consumer complaints. As Verizon’s buildout supposedly progressed last year, the city Department of Information Technology and Telecommunications [DoITT] “began to receive anecdotal evidence, largely in the form of consumer complaints, suggesting that Verizon was simultaneously taking credit for ‘passing’ households and declining to accept orders for nonstandard service installations from those households.” A nonstandard service installation is the first installation in an apartment building.

Verizon won’t even go in to buildings in the Manhattan’s richest neighborhoods:

[O]ne property manager from a well-known firm complained that Verizon would not complete the NSI [non-standard installation] at a building on Sutton Place unless 100 percent of the apartment dwellers committed to Verizon FiOS. This property manager also said only two of the eleven multiple dwelling properties he managed had Verizon FiOS and that installations took anywhere from six months to two years.

Verizon’s response to the audit is longer than the audit itself. The company is unhappy that the de Blasio administration is poking around in its business. It said the audit “repeatedly sets forth a variety of irresponsible, inaccurate, and unsupported factual and legal claims about Verizon’s compliance with the Agreement.” Verizon also complains that the audit relies too much on “anecdotal evidence.”

One reason the study is based on “anecdotal evidence” is that Verizon wouldn’t provide the information the city needed to do a firmer audit. To hear the city tell it, Verizon stonewalled its query at every point.

Verizon typically staffed its audit meetings with a battery of attorneys, who regularly interceded between DoITT’s auditors and Verizon’s operational and administrative staff, obstructing and delaying DoITT’s ability to obtain answers to questions and access to documentation and electronic systems.

From the city’s press release:

Currently, some 22 percent of New York City households have no Internet connection; that number jumps to 36 percent for families living in poverty. But even for those who have it, most pay too much for what they get, with the best $40 per month package available to New Yorkers, for example, featuring download and upload speeds that are a fraction of those available in other major cities like San Francisco and Seoul. The lack of competition in the City’s broadband market is one of many issues at the root of this problem.

Verizon FiOS was supposed to compete with Time Warner Cable and Cablevision. So far, its rollout has failed so badly, millions of potential customers can’t even buy it. Now that the city has called out Verizon on its lapses, what action will it take next?

Update: I wrote more on this topic at Politico NY.

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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